A shift towards evaluating properties for individual climate change risk may mean insurance premiums will rise on coastal properties.
An updated Tonkin and Taylor report on coastal hazards released last week showed close to 25,000 Christchurch houses are at risk of future coastal flooding and 1000 are at risk from coastal erosion.
In a worst-case climate change scenario, flooding could affect the coastal city and Banks Peninsula properties within the next 50 to 100 years, the report said.
Insurance Council chief executive Tim Grafton said climate change was a certainty.
“Sea level will rise and the frequency of extreme weather events will increase.”
Mr Grafton said each insurer would take a different approach to risk, depending on the frequency and consequences of flooding.
“With respect to climate change, the price signals are likely to be incremental changes over time, rather than swift and rapid change. There is therefore time for a range of adaptation measures that make economic sense to be considered which
. . . enable the transfer of risk to insurance to remain affordable and accessible.”
Some properties could become uninsurable if they flooded with high frequency, Mr Grafton said. “They become less insurable as it becomes more certain that they will flood.”
He said New Zealand was unusual in offering all-perils cover house insurance. “In many other countries, flood is an optional add-on to house insurance policies, so flood risk is separately priced.”
Redcliffs resident and Ray White Ferrymead salesman, Mark Roberts, said insurance companies will always try to mitigate risk.
“At the end of the day, people love being by the ocean. They will make decisions (about a property) based on the statistics they get and the risk profile.”
Last week’s report is an update of Tonkin and Taylor’s widely-criticised 2015 report suggesting 18,000 properties were at risk of flooding and 6000 susceptible to erosion.
The 2015 report was criticised as being scientifically flawed, leading to the updated 2017 version.
Christchurch Coastal Residents United spokesman Darrell Latham said climate change was a national responsibility, not just the responsibility of coastal communities or local councils.
“Mitigation and compensation must be part of the conversation,” he said.