A Christchurch homeowner’s challenge to his insurer’s sea surge risk assessment illustrates how climate and natural hazard modelling is influencing property premiums in New Zealand.
According to Stuff’s report, Burwood resident Trevor Taylor recently saw his annual home insurance premium rise by about $1,000, an increase of roughly one-third. The notice from his insurer, Tower, advised that new categories for landslide and sea surge had been added to its risk-based pricing, alongside existing assessments for earthquake and flood.
Taylor has lived in his home for close to 35 years. The property is about 3.5 kilometres from the coast and approximately 9 kilometres from Christchurch’s Port Hills. He said he does not understand how the new perils apply to his site. “The only time we had a flood was when the council was doing roadworks and put cloths on the stormwater drains. There was a foot of water on the road, but that didn’t come near the house,” Taylor said, as reported by Stuff. He added that the water subsided once the drains were cleared.
After he complained, Tower advised that the property’s sea surge risk was rated “high,” its earthquake and flood risks were assessed as “medium,” and its landslip risk as “very low.” Taylor said he is particularly concerned about the sea surge classification. “I think they’re getting a bit mixed up with tsunami and sea surge,” he said.
Tower chief underwriting officer Ron Mudaliar said the company’s assessment reflects how storms can move seawater inland through connected waterways, affecting properties away from the immediate shoreline. He defined a sea surge as occurring “when strong storms push seawater inland, raising tidal heights above normal levels.”
In Taylor’s case, Mudaliar said the high-risk rating reflects both the probability of flooding via nearby water systems and the expected cost of repairing any resulting damage. “This is due to the property’s proximity to connected waterways, including the Avon River, Travis Wetland Nature Heritage Park, and Horseshoe Lake. If a storm coincides with high tides, water levels can rise, and waterways can carry water many kilometres inland, causing flooding during a sea surge event,” Mudaliar said.
Mudaliar said Tower’s assessment is consistent with Christchurch City Council’s flood mapping, which places Taylor’s property in a flood hazard management area with an estimated one-in-200-year flood risk. He said customers can adjust premium costs by increasing policy excesses or removing optional benefits and that Tower can discuss these options with policyholders.
Taylor said he tried to obtain more detail on the assessment by submitting a request under privacy legislation for all information Tower holds on his property. He said the insurer declined, stating that the information was commercially sensitive and not personal data. “If there was a real hazard, surely for health and safety they should tell me exactly what that is,” Taylor said.
Mudaliar said Tower’s modelling is focused on insurance risk rather than health and safety outcomes. He said the company’s internal hazard model is not intended for release to individual customers. “[Our] modelling incorporates more than 200 million data points, sharing this detailed data would not help customers understand their risks. It is also commercially sensitive. Instead, we simplify this information into a risk rating, which represents our evaluation of the insurance risk for a property based on this data,” he said.
According to Mudaliar, the company combines this modelled hazard information with property attributes such as construction type, estimated rebuild or replacement costs, any mitigation measures in place (for example, floodproofing, seawalls, levees, or retaining structures), and additional information supplied by homeowners.
Tower added landslide and sea surge to its risk-based pricing framework in August. Mudaliar said the change was intended “to bring greater transparency to how climate and natural hazard risks” affect premiums and “to remove cross-subsidisation so that customers only pay for the risks their homes face, not anyone else’s.”
Taylor maintains that the classification does not match his understanding of the site’s exposure. He said: “You’re talking about a storm blowing water inland from the sea, which is completely different [to flooding]. I would like someone to come and look at it with me, face to face. It would be nice if they said, ‘let’s walk around and look at it logically’.”
The Insurance Council of New Zealand (ICNZ) has noted that the country is highly exposed to natural hazards, and recent scientific evidence points to more frequent and intense climate-related events. In response, insurers are moving toward more granular, risk-based pricing for perils such as coastal inundation, flooding, and land instability. In cases such as Taylor’s, insurers are using company-specific models and external hazard data when setting premiums for neighbouring properties.
The Insurance and Financial Services Ombudsman (IFSO) Scheme advises customers who consider a premium increase unreasonable to use their insurer’s internal complaints procedure as a first step. However, the scheme’s guidance notes that it has “a very limited ability to review complaints about an insurer’s pricing of a risk or premiums,” indicating a narrow role in reviewing underwriting decisions.
Mudaliar said customers seeking more clarity on physical risk can look at publicly available hazard information from local authorities and other sources, and, if they wish, obtain independent advice, alongside the insurer’s risk rating.
The Christchurch dispute comes amid national research quantifying New Zealand’s flood exposure under current and future climate conditions. A five-year nationwide study led by Earth Sciences New Zealand estimates that more than 750,000 people currently live in areas exposed to flooding from one-in-100-year rainfall events. Under a scenario of an additional 3 degrees Celsius of warming, that number could exceed 900,000 people, reflecting changes in the frequency and intensity of heavy rainfall.
The research estimates that about $235 billion in building assets are currently exposed to such events, rising to approximately $288 billion under the higher warming scenario. The study also identifies infrastructure exposure: about 26,800 kilometres of roads and 14,100 kilometres of stormwater pipelines are currently at risk, increasing to 30,800 kilometres and 15,400 kilometres, respectively, under additional warming. Around 21% of national grid sites are already exposed, with that figure projected to reach 29% in the higher-warming case.
