In the absence of a national law, councils and insurers are stepping in to make decisions with far-reaching consequences for homeowners, insurers and communities. Some councils, like Nelson, have introduced hazard maps identifying properties at heightened risk of flooding and erosion. While intended as planning tools, these maps have affected property sales and insurance premiums.
Nelson mayor Nick Smith said councils are moving forward with local strategies, but lack certainty about how these efforts will be supported nationally. The legal ambiguity is adding pressure on ratepayers and councils already managing rising climate risks.
Insurance Council of New Zealand (ICNZ) chief executive Kris Faafoi acknowledged the need for clarity. He warned of the growing risks posed by more frequent and severe weather events, noting that insurers are already adjusting premiums based on perceived climate risk.
Faafoi confirmed that councils investing in risk-reduction measures—such as coastal defences or flood mitigation—can expect “generally a positive premium experience.” However, he stressed the need for a consistent national framework rather than a patchwork of individual council approaches.
Data sharing also remains a point of concern. While insurers rely on a mix of their own claims data and information from Crown research agencies, this data is not always aligned with council hazard mapping. Faafoi said ICNZ supports creating a base-level data sharing agreement to inform both local and national policy.
Another unresolved issue is who should pay for climate adaptation. The government has taken a case-by-case approach to recovery funding after events like Cyclone Gabrielle, but a sustainable model has yet to be formalised. Faafoi noted that global reinsurers are watching New Zealand’s policy response closely, as major events cost billions in claims.
“The insurance sector wants to make sure that [it] is sustainable,” Faafoi said, highlighting the importance of having reinsurance in New Zealand. “When these large-scale events happen, we would have the ability to make sure that claims are being paid out.”
More than 675,000 New Zealanders currently live in flood-prone areas, with 50,000 buildings at risk of coastal inundation. Without specific mitigation, Faafoi said, those in the most vulnerable communities may face rising premiums or even difficulty obtaining insurance at all.
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