AA Insurance has temporarily stopped issuing new home, business, and landlord policies in Westport and nearby communities, citing flood risk and concentration of exposure in the area.
The insurer has placed an underwriting hold on new policies for properties in the 7825 postcode, which covers Westport, Carters Beach, and Cape Foulwind. The move applies to new home, business, and landlord insurance only and does not change cover for existing AA Insurance customers in the postcode. AA Insurance notified Buller District Mayor Chris Russell of the change in a letter sent at the end of 2025, saying it would not take on additional risks in the area for the time being after its internal measures of local flood exposure reached set limits. Current policies remain in place. The company says existing customers can continue to renew subject to standard underwriting criteria, and that cover can be transferred to a purchaser when an insured property is sold, using its established transfer process.
Summarising the letter on the Buller District Council website, Russell said the direct impact would be limited to new business. “It is temporary and applies only to new home, business, and landlord insurance policies. Existing policy holders and those looking to sell are still protected. Whilst not ideal, this does not mark any sort of insurance retreat from Westport,” Russell said. In a written statement, AA Insurance head of underwriting Dee Naidu said the pause reflects the company’s view of local hazard exposures. “This decision reflects the elevated natural hazard risk of flooding in the area, and that our exposure has reached a level where a pause on new policies is the most responsible step to ensure we can be there for our existing customers when they need us most,” Naidu said, as reported by RNZ. The insurer states that it regularly reviews locations where underwriting holds apply and that, if exposure in 7825 falls “sufficiently below its maximum exposure limit in future,” it intends to resume writing new business in the area.
The timing of the decision coincides with work by West Coast Regional Council and Buller District Council on the “Resilient Westport” programme, which combines new flood infrastructure with emergency management initiatives and long-term land-use planning. Westport has experienced repeated flood events, including a 2021 flood that left more than 100 homes uninhabitable. The regional council’s current scheme includes about 17 kilometres of stopbanks in and around the town. Most sections remain in design or consenting, but two segments have already been completed.
West Coast Regional Council chair Colin Smith said the scheme is being designed for a 1-in-100-year flood event under climate scenario RCP6.0 and is intended to lower the risk of inundation from the Buller River. He said completed works, including the McKenna’s stopbank and the Cats Creek bund, are expected to protect around 20 to 30 households that previously flooded in nearby Eastons Road and Mill, Domett, and Colvin streets. “The Avery’s stopbank, which is being consented, will provide further protection to 40 to 50 properties in the Orowaiti Road area, which are at risk of overflow from the estuary. We have four stopbanks, at least, scheduled to begin construction [in 2026]. This includes Avery’s, Floating Lagoon, Carters Beach, and Upper Buller,” Smith said.
Regional council chief executive Darryl Lew said structural works are being combined with non-structural measures. The councils have updated Westport’s emergency management plan and commissioned enhanced flood forecasting capability with Earth Sciences New Zealand to increase warning lead times. Lew noted that residual risk remains even with upgraded defences. “We know that it doesn’t matter how high we build the flood banks – there could always be a flood that’s bigger than that comes along and inundates the town,” he said.
Alongside the flood scheme, Buller District Council has backed a concept that would enable parts of Westport to shift over time to higher ground by opening up lower-risk land for future development. Both councils say they plan to brief the Insurance Council of New Zealand (ICNZ) and individual insurers as different stages of the scheme are completed, including site visits to discuss design assumptions, standards, and construction progress.
Industry and climate analysts see the Westport underwriting pause as an example of how natural hazard risk is shaping geographic capacity decisions and may influence public investment and planning. Belinda Storey, managing director of consultancy Climate Sigma, said the move is in line with approaches used by Suncorp, AA Insurance’s ultimate owner, in Australian markets where flood risk is high and mitigation work is pending. She said the focus on new business, rather than existing policies, suggests that new development and portfolio growth in higher-risk locations are key points of pressure.
Read next: Can Kiwis keep home insurance beyond 2035?
Storey said such pauses can be read as a signal to local and central government about insurers’ expectations for flood risk reduction. “This is something that Suncorp have definitely done in Australia, where they have withdrawn insurance from a particular town on the condition that massive investment in flood defences is undertaken,” Storey said, as reported by RNZ. She also cautioned that reliance on large-scale defences may alter exposure if it supports further development behind stopbanks. She described a stopbank as “effectively a long, skinny dam” and warned against assuming defences remove risk in extreme scenarios. “If you build defences, people build new houses. We shouldn’t be building any new houses in Westport, full-stop,” she said.
Victoria University of Wellington emeritus professor Jonathan Boston, a former member of a government working group on climate adaptation, said the Westport pause is likely an early example of broader shifts in availability of insurance in higher-risk locations. “There will be more and more situations in which insurers, understandably, say the risks are too great to provide insurance, even with very large excesses, and will pull out,” Boston said.
Boston argued that there is a strong case for clearer disclosure of when and where insurers are withdrawing or sharply repricing cover, whether through underwriting holds, non-renewals, or pricing that leads to effective retreat. “I think there’s a very good case for transparency, because, among other things, it will provide the kind of information we need to understand the seriousness of the challenges we face,” Boston said. He added that regulators, including the Reserve Bank of New Zealand (RBNZ), should receive detailed information on locations where cover is constrained, not only areas where insurers choose to make public statements. Looking ahead, Boston said some communities exposed to flooding and sea-level rise will have limited options for structural protection. “With climate change … there are going to be more and more communities, and more and more postcodes, where it will not be possible to provide protection, and where the only reasonable and effective risk-reduction strategy will be relocation,” Boston said.
AA Insurance has applied comparable geographic limits elsewhere. In September 2025, it introduced a temporary hold on new home policies in Lincoln’s 7608 and Rolleston’s 7615 postcodes in Canterbury, citing seismic risk exposure and claims experience. Naidu said at the time that such measures are based on internal risk assessment and are reviewed periodically, with the option of reopening to new business if the risk profile changes. Across affected areas, the company says customers with existing home or landlord policies can renew if they meet standard criteria, and that buyers of already insured homes can generally obtain cover through the transfer process.
The Westport move also sits within a wider national debate about the availability and affordability of home insurance. Consumer NZ has reported sustained premium growth since 2000 and has identified insurance as one of the main financial pressures for households, alongside housing, food, and debt. The organisation has pointed to issues arising from risk-based pricing in higher-risk locations and the difficulty many consumers face in understanding how hazard and exposure assessments are reflected in premiums and terms. For insurance professionals, the Westport case illustrates how hazard modelling, portfolio concentration limits, and capital management are interacting with local infrastructure planning and national climate policy. It also reflects growing expectations from policymakers and researchers for clearer information on where and how insurers are adjusting their footprint at a postcode and community level.
