Kris Faafoi, chief executive of the Insurance Council of New Zealand (ICNZ), is calling for immediate action as the country’s insurance sector faces increasing pressure from climate-related events.
Faafoi said the impacts of extreme weather are no longer a distant possibility but a present reality for New Zealand.
“Extreme weather impacts aren’t a distant threat; they’re already here,” he said, emphasising that the nation cannot afford to delay its response to climate change.
Recent years have seen a marked rise in insurance claims due to storms, floods, and landslips, with several years setting new records for weather-related losses.
The 2023 events alone, including Cyclone Gabrielle and the Auckland Anniversary floods, resulted in $4 billion in insured losses and more than $14 billion in total damages.
The government’s release of the National Adaptation Framework outlines a coordinated strategy for managing climate risks.
The framework details how government agencies, local councils, private sector organisations, and communities will work together to reduce and manage the impacts of climate change.
Faafoi said the insurance industry supports the framework’s focus on clarifying roles and responsibilities and improving the availability of risk information.
A key component is the requirement for councils to develop 30-year adaptation plans for areas vulnerable to flooding and coastal hazards.
Faafoi described this as a practical measure to help communities make informed decisions about future development and resilience. However, he cautioned that planning alone is insufficient.
“Plans alone won’t protect anyone from the next storm,” he said, stressing the need for timely implementation, as some communities are already experiencing repeated losses.
Climate Change Minister Simon Watts has indicated a change in the government’s approach to supporting homeowners affected by severe weather.
The new strategy will move away from large-scale buyouts and full compensation, focusing instead on addressing genuine hardship and supporting infrastructure recovery.
“Government’s intent is to move towards an end state where the Crown no longer distorts risk signals and blunts incentives to manage risk by providing financial assistance where homeowners suffer significant losses after major events,” Watts said.
Property-level interventions, including buyouts, will be considered only when they are the most cost-effective option.
The framework also recognises the unique legal and cultural status of Māori land, with policy decisions to reflect collective ownership structures.
Watts said: “In the near-term, where central government provides any discretionary support, the objective is not to fully cover homeowner’s losses, and there should be no expectation of financial assistance based on full pre-event property valuations.”
The insurance industry has expressed readiness to work with government and local authorities as new adaptation measures are implemented.
Faafoi highlighted the importance of embedding resilience into building standards and limiting new development in high-risk areas. He pointed to local projects, such as the South Dunedin Futures initiative, as examples of communities engaging in forward-looking adaptation planning.
ICNZ’s recent discussions with global reinsurers reinforced the need for adaptation to maintain access to international insurance capital.
Faafoi said long-term policy stability and cross-party support are essential for sustaining confidence among insurers and investors.
“Climate change won’t wait for election cycles. Enduring, cross-party political support for adaptation is crucial to maintaining confidence from insurers, investors, and communities alike,” he said.
While the National Adaptation Framework is viewed as a positive step, both industry and government leaders agree that urgent action is required.
The focus remains on strengthening community resilience, investing in infrastructure, and ensuring that insurance remains accessible as New Zealand adapts to a changing climate.
