‘Stop building in dumb places’
The restaurant owner who can’t afford insurance; the earthquake-prone building owner who can’t get insurance; the new homeowner with a busted bank, no EQC cover and a $200,000 retaining wall bill; the landslip victim who discovered the yawning gap between EQC payouts and the cost to actually repair your land.
These are the faces of shaky, slippy, stormy Wellington’s looming battle over insurance.
Experts have warned for years that insurers could pull out of covering Wellington homes as climate change raises the risk and frequency of floods, slips and storm surge.
But with insurance companies increasingly measuring hazard risks by individual house, insurance retreat is already here. The Post picked five random Petone properties for sale and ran them through the Tower online quote tool. Four came out as uninsurable.
Tower and other companies were quick to reassure Wellingtonians they still cover homes in the capital (and Petone). But Victoria University of Wellington emeritus professor of public policy, Jonathan Boston, warned the future looked grim.
“I’m very concerned where it’s going. We’re faced with escalating premiums, coupled with reduced coverage and increased underinsurance.”
In the hilly Wellington suburb of Northland, neighbours Gill Parnham and Ainsley Renouf each had to find hundreds of thousands of dollars to build a new retaining wall, after a 2022 slip took out their bank, and both struggled to get insurance payouts.
Insurance Council boss Tim Grafton said that, faced with increasing reinsurance costs and a $3.7 billion claims bill for Cyclone Gabrielle and the Auckland Anniversary floods, the industry had to increase premiums and try to reduce hazard risks.
The best way to do that was to “stop building in dumb places”, Grafton said.
But in shaky Wellington, nowhere is really “safe”. If you’re not on the coast, you’re probably on a floodplain, and if you’re not on a floodplain, you’re probably on a slippery slope.
“Wellington is going to be in an incredibly challenged position, which may raise questions about whether the capital remains here,” said Boston. “As a city, it’s going to be hammered from all directions.”
Climate Change Minister Simon Watts said the Government had identified insurance affordability and accessibility as an issue and was committed to producing a climate adaptation framework.
But the thorniest question remains unanswered – who should pay to move people out of high-risk zones?