Action required to protect New Zealand from natural hazards impact

Press release

The insurance industry has released a 15-point plan aimed reducing the social and economic impact of natural hazards in New Zealand – heeding the call will help keep insurance available and affordable for all.

The Insurance Council is urging decision-makers to implement a range of legislative and strategic recommendations because New Zealand remains one of the most vulnerable countries to the impact of natural disasters for an economy of our size.

Chief Executive of the Insurance Council Mr Tim Grafton says that based on data going back to 1900, New Zealand can expect to face, on average, annual costs of $1.6 billion (just under 1% of its GDP) from natural disasters.

“Without risk reduction measures the cost from natural disasters will increase,” he says.

On top of the ever-present risk of earthquakes, volcanoes and tsunami, 2013 and 2014 were among the most expensive years for weather-related events in New Zealand. About three-quarters of the $40 billion cost of the Canterbury earthquakes (20 per cent of the country’s GDP) will be met by insurance.

On the back of international calls this week for governments to prioritise the mitigation and adaptation of climate change impacts, the Insurance Council warns that insurance must remain available and affordable for everyone otherwise individuals, business, local and central government will end up bearing the brunt of the costs.

“Climate change will increase the risk of flooding in parts of the country and drought in other areas,” says Mr Grafton. “Coastal areas will be more vulnerable as sea levels rise and we can expect more severe windstorms in the west.”

Among the 15 recommendations, Insurance Council recommends better central coordination of national responses to natural hazard management, amending the Resource Management Act to include the management of natural hazards and listing all natural hazards on property LIM (Land Information Memorandum) reports.

“We cannot control the forces of nature, but we can reduce their impact significantly by building New Zealand’s capacity to withstand and recover from natural disasters,’ says Mr Grafton.

Insurance Council of New Zealand Recommendations

Strategy and legislation

1. A strategy and co-ordination – establish a dedicated agency within the Department of Prime Minister and Cabinet (DPMC) to oversee a co-ordinated strategy to reduce the impact of natural disasters before they strike.
2. Develop a national plan – draw on central, local and private sector interest to develop a national plan to make
New Zealand better protected from natural hazards.
3. Legislative alignment – review legislation to ensure risk management of natural hazards is aligned and focused on reducing or avoiding natural hazard risks consistent with the strategy.
4. Take the long-view – require local authorities to deny consent applications where taking the long view shows risks from natural hazards will increase.
5. Plan to address local hazards – legislation should require local authorities to assess those natural hazard risks relevant to their locality and have infrastructure plans in place to address them.
6. Safer commercial buildings – make non-structural seismic restraints part of annual building inspections.

Information to make the right decisions

7. Science research – focus research spending to best inform risk reduction decisions.
8. High quality data – establish a high quality, national natural hazard database to inform decision-making such as the cost benefit trade-offs around risk reduction.
9. A hazard risk on every property – ensure there is publicly accessible information on the natural hazard risks every property in New Zealand faces.
10. Be clear what are acceptable risks – provide local government decision-makers clear guidance about what can be considered acceptable risk from natural hazards.
11. Consistent approach across New Zealand – provide local government with a natural hazards identification template so there is a consistent approach applied across the country.
12. Educate people – a public education programme to inform people about the natural hazards they face and the actions they or their community can take to minimise them.

Funding

13. Fund resilience – a commitment to long-term annual funding of initiatives to build resilience where the risk and investment trade-off justifies it.
14. Funding now saves bigger cost after an event – the cost of implementing adaptation measures is significant. There needs to be long-term, bi-partisan commitment to fund measure that build pre-disaster resilience.

Insurance

15. Keep insurance affordable and available for all – introduce comprehensive measures to reduce the risk of natural disasters and remove levies from insurance premiums to help keep the transfer of risk to insurance affordable