Looking out for your future
Tower wants Kiwis to think longer-term about the threat of climate change
Climate change and severe natural weather poses a greater threat to New Zealand homes. According to the Lloyd’s of London Insurance Risk Index Report, New Zealand is the second riskiest country in the world for natural disasters, after Bangladesh. As climate change intensi es extreme weather, there has never been a more critical time for kiwis to think long-term, to protect their assets for the future.
Building resilience is key for Kiwis, and companies in the financial sector are developing tools to help people understand their climate risks and encourage action. Tower has introduced a new risk-based pricing model in recent years, calculating house insurance premiums based on individual climate-related exposures.
Tower is the rst insurer to provide this level of transparency to customers with low, medium or high ratings for ood and earthquake, paired with a breakdown of how much each risk has contributed to their premiums. While a small number of customers have seen the ood portion of their premiums increase, nearly 90 per cent of households have seen a decrease.
According to Ron Mudaliar, Chief Underwriting f cer at Tower, risk-based pricing has been introduced to make premiums fairer and more re ective of the real risks facing each Kiwi home. He says Tower is keen to engage with Kiwis on climate-related risks and help households become more future-proof.
Mudaliar believes more precise premiums will help inform and encourage Kiwis to take action to make their properties resilient. “For example, if a customer in a high-risk area has built a wall or put their house on stilts to guard against oods, we can take that into account,” he says.
“We believe this model encourages customers to make changes and take a more proactive approach to climate change. We don’t want to be the ambulance at the bottom of the cliff. We want to identify high-risk homes and work with people to protect them.”
Leading insurers like Tower have a signi cant role to play in shaping the behaviour of New Zealanders and encouraging us to become more sustainable. As a company uniquely placed to discuss climate risks, Tower is in dialogue with the government and local councils.
“It’s not just an insurance issue,” Mudaliar adds. “It’s about working together on mitigation, looking at where we should build, or reviewing where we should have a managed retreat due to climate effects. It’s a long-term, nationwide programme.”
Last September, Tower introduced a sustainability bene t for home insurance customers, providing them with an extra $15,000 in the event of a total loss from a
re or ood on top of the sum insured. The claimant can use the money to buy more sustainable materials for their home as they rebuild.
Tower’s climate efforts come alongside a company-wide drive to reduce its carbon footprint. Tower recently moved into a new 6 Green Star corporate headquarters in Auckland’s CBD as it looks to implement a comprehensive climate action plan.
Tower is also backing students embarking on a world- rst Bachelor of Climate Change Degree at the University of Waikato, and is the rst corporate supporter of scholarships for the degree. Tower has pledged $45,000 over three years to support Kiwi students.
Mudaliar says Tower is keen to help Kiwis protect their assets and nancial future by thinking long-term.
“The measures we have taken are designed to help support and protect the assets people own or use, and encourage them to make the right choices. As we look ahead to the future, every New Zealander will need to take a long-term view.”
Learn more at tower.co.nz