Insurance sector to aid in New Zealand climate policy development

The CE said a large portion of NZ-ers live in high-risk areas.

The Insurance Council of New Zealand (ICNZ) welcomed the government’s promise to introduce legislation this year for a Climate Adaptation framework aimed at preparing the country for the effects of climate change on lives, property, and communities.

ICNZ Chief Executive Kris Faafoi said government leadership in managing natural hazard risks was necessary to provide certainty for New Zealanders. 

The government’s response follows the Finance and Expenditure Select Committee’s Inquiry into Climate Adaptation released in October 2023.  

Faafoi noted that a significant portion of New Zealanders live in areas vulnerable to increasing natural hazard risks, and the prospect of more frequent and severe weather events could impact the stability of the housing, finance, and insurance markets. 

The insurance industry intends to contribute to policy development to ensure communities remain protected.  

He emphasised the importance of avoiding development in high-risk areas, investing in protective infrastructure, and improving disaster recovery preparedness.

ICNZ also supports a cross-party solution to ensure a long-term, stable approach to climate adaptation, which is critical for securing reinsurance and minimising the insurance protection gap.  

Faafoi cited discussions between Climate Change Minister Simon Watts and reinsurers in London last year, where reinsurers expressed confidence in New Zealand’s proactive approach and consistent policy settings. 

He stressed the urgency of addressing climate risks now to mitigate higher costs from future climate-related disasters, highlighting research showing that every dollar invested in adaptation yields substantial economic benefits.