IAG New Zealand, the country's biggest general insurer, is calling for a three step plan to combat flood risk, including halting building in flood prone areas.
The steps IAG wants to see include;
♦ A joint government and private sector project to build a common understanding of priority flood-prone communities;
♦ Implement a National Policy Statement to cease development in flood-prone locations. And;
♦ Establish a national programme of investment in flood protection.
IAG NZ CEO Amanda Whiting says IAG wants to avoid a scenario where the homes and businesses most exposed to flooding will find it difficult to obtain or afford insurance.
Whiting says while the government's recently released National Adaptation Plan is a great start in the response to the impacts of climate change, "we need to be much more specific, targeted and urgent about the steps we will take to reduce the risk of flooding."
“To keep people safe, we need to think smarter. We need greater investment in infrastructure and other solutions that either protect people or move them out of harm’s way,” says Whiting.
IAG trades through the AMI, State, NZI, NAC, Lumley and Lantern brands, and provides general insurance products sold by ASB, BNZ, Westpac and The Co-operative Bank. It insures some $715 billion of commercial and domestic assets.(You can see more on the National Adaptation Plan here and here).
“Development and investment decisions are leading to more people living in flood prone locations, where they face growing risks due to the impacts of our changing climate on rainfall and sea level. The last two years alone have seen 10 major floods with insured losses of around $400 million, plus wider economic and social costs that extend into the billions," Whiting says.
“Tragically, weather events in New Zealand have also resulted in serious injury and loss of life. Reducing the impacts of flooding is a large and complex challenge, but not an impossible one. There are practical, concrete actions we can take to increase our resilience."
“The most sensible course of action is to stop making this problem worse and better protect the 1% of New Zealand homes that are most exposed to flooding. New Zealand’s traditional focus on response and recovery must expand to place much more emphasis on prevention and risk reduction," says Whiting.
Details on IAG's three steps are below.
1. A joint government and private sector project to build a common understanding of priority flood-prone communities
First, we need to create a common understanding of which flood prone locations are most in need of support to reduce the risk they face.
This can be done through a formal project between central and local government, and other stakeholders to identify and prioritise flood prone locations. This project needs to take into account current exposure, quality of current flood protections, the financial position of councils, the deprivation and resilience of communities, the availability and affordability of insurance and lending, as well as current flood protection investment plans and projects.
2. Implement a National Policy Statement to cease development in flood-prone locations
Second, we need to stop building in flood prone locations, so the problem doesn’t get worse.
This would best be achieved through a National Policy Statement developed by the Ministry for the Environment/Manatū Mō Te Taiao working alongside local government and other stakeholders to develop a statement that requires councils to avoid new development, or intensification of existing development, within locations that are exposed to flooding that may occur more frequently than one in 50-years.
3. Establish a national programme of investment in flood protection
We need to develop and carry out a programme to improve flood defences in our most at-risk communities.
This would involve the New Zealand Infrastructure Commission | Te Waihanga working with Treasury/Te Tai Ōhanga, local government and other stakeholders to develop a business case and a programme of work for investment in flood protection infrastructure for priority flood-prone locations.
Whiting describes the three steps as practical, saying they would lead to a sensible and targeted reduction of flood risk for the communities that most need it.
"IAG is prepared to play its part in each of these steps," she says.
“Reducing the impact of flooding through better planning and infrastructure investment will help us to avoid a situation in the future where low-lying communities are more frequently disrupted by floods. If this continues, those homes and businesses that are the most exposed to flooding will find it difficult to obtain or afford insurance."
“For all New Zealanders, this is a future case scenario we resolutely want to avoid. Failure to properly plan and invest will not only make insurance harder to get and more expensive over time, but also cause wider and more devastating impacts on the physical and financial wellbeing of our most flood-prone communities," says Whiting.
*In an episode of our Of Interest podcast last month, Tower CEO Blair Turnbull spoke in detail about climate change and insurance.
17 Comments
A joint government and private sector project
We all know what that means; EQC all over again.
This.
In my town I'm seeing new subdivisions on the side of town where paddocks are criss-crossed with drains or little stream, and where the sections always have standing water for days after rain. The council's policy for that side of town is for new builds to have a soak pit for storm water so as not to overload the town storm water system. Those are going to fill up quick smart. The area is also in a 50 year flood zone, so a 2% chance of being flooded in a given year.
Next town up also has new subdivisions in a flood zone. They'd better pray the stop banks stay in good nick.
Further north, Whakatane has a new subdivision in a storm surge zone. It was council land ...
"Implement a National Policy Statement to cease development in flood-prone locations" and could
A very important consideration. Another option although unlikely to carry much weight is the house to be built up to a meter higher such that in a 1:750 year flood water rises to no more than 200-300mm below joists or equivalent.
As WWH has said Councils are still merrily approving sub divisions in flood prone areas.
Of course one can always adopt buyer beware and the flood information should be in the LIM for an assessment to be made.
LWTF homes are probably not the best if you know there's a chance of a flood - and the purpose of a flood plain is to.... flood. So maybe don't build a house there that can't be moved later, or that needs extensive work to repair in the event of floods or quakes.
QBH homes are probably more resilient to floods, fires and quakes than an LWTF (Light Weight Timber Frame) house.
GBH. Slabs not the problem, they can be elevated, it just costs a bit more. CHCH has belatedly shown the way; flood management and floor level control areas reflecting 1:200 yr water levels have been mapped out and are easily accessible on CCC websites. Consents, property values and insurability are gradually reflecting the new realities. A gradual house elevation/retreat is under way. Consistent FL minimums need to be imposed centrally, it's too political to leave it to locals.
They are so right about "forcing" no new builds in flood-prone areas through a National Policy Statement.
Thing is, it is central government that are purposefully driving that type of high-risk urban development within amendments to the RMA (i.e., NPS Urban Development) pushing for more and more urban growth. And subsequently, Regional and Local Councils respond via producing urban growth strategies that take NO ACCOUNT of whether or not the land or infrastructure capacity exists when pulling their growth numbers out of thin air. Here's an example from the Wellington Regional Growth Framework;
7. Kāpiti-Horowhenua Planning
Joined up planning for public transport, social and other infrastructure, and services to enable a possible 15,500 new houses and a possible 39,000 more people in greenfield developments and a possible 10,400 new houses for a possible 22,800 people in existing urban areas within Horowhenua/Kāpiti in the next 30 years.
When they currently have serious existing problems in Kāpiti with stormwater overflow, likely combined with rising ground water levels that produce flooding/ponding throughout the district.
Kāpiti requires all new development to be "hydraulically neutral". In other words, build anywhere as long as you produce an engineering report that says you meet the development criteria. That rule in their district plan would make for a great Tui billboard.
Councils seem to allow houses to be built in 1 in 100 year flood zones, but some are now requiring that before they are allowed to be built on, the owner must put something on their title explaining this, and so that the council isn't liable. I am seeing brand new houses being advertised for over 1 million, some even over 2 million that are built in these flood zones. I just wonder why banks will lend on them, and whether insurers will continue to insure them. But council can also help by building better flood management. Flood zones also can change.
WI. Title notation is a cop out. Those councils are ducking their moral responsibility to protect future occupants if they are allowing finished floor levels below 1:200. For new suspended floor designs the additional cost of longer compliant piles is not prohibitive. Slabs more so but you makes your choices. In CHCH all new housing must meet 1:200, significant alterations may also trigger this requirement. The sky hasn't fallen.
Designers can make sure the slab level is above the maximum flood level height. But I don't think councils will take this into consideration, if the land itself is inside that zone. I don't think 1:200 zones are provided by most councils. It seems it is mainly 1:50 and 1:100 for some councils to consider it a flood risk.
The current spate of flooding in some parts of the country provides lessons beyond perhaps the obvious one, which is to avoid flood prone areas. The global warming lobby will immediately point to these floods as examples of the more frequent and severe weather events that are now becoming the norm and I totally agree that this is the case. However, some of our planning decisions with respect to housing also contribute to elevating the flood risk.
In the drive to get more houses built to satisfy the current demand (or simply for a financial return for a property owner), there has been an ongoing trend to allow more subdivision and cross leasing of existing properties especially in the more popular urban areas. This means that with more total roof area and less potential ground soakage area on any given subdivided or multi-unit plot, the runoff to receiving streams and rivers is increased. Even new 'green fields' housing developments are now constructed with much higher building-footprint densities. Increased storm water runoff from homes now occupying what used to be bare ground soakage land will result in more storm water to be dealt with by the receiving water courses and sometimes they just can't cope.
IAG should not be allowed to tell people where they can build. AMI Insurance went bust and didn't pay their claimants. I am one of those. If I want to build on flood prone land and not take any insurance that is up to me. There may also be other insurance companies that will cover flood prone land if the home is built high enough that it doesn't matter..it is up to me as a customer to choose insurance if I want it and from who gives me the best (if any ) coverage and ACTUALLY pays the claim. IAG needs to stick to their own business.. apparently the risks they take are already built I to the premium..so why do they want to decide where people can build? I'll tell you..they want to keep charging premiums and lower the risk if having to pay any claimants. I don't use IAG so they have no right to tell our Government where I can build my home. When they start paying claims is when they should have any right to speak again about anything.
Properties with water views are nice and priced accordingly. Surely the buyers can afford a 2 x (or more) insurance premium.
For existing flood prone towns, residents have known for years. Like Kiribati, or even coastal Jakarta, their land is exposed to rising sea levels.
Living in Dunedin, half the existing city is in flood prone areas or some other natural hazard zone, or essentially at sea level, or built on reclaimed land - or on some combination of those.
Really wonder what's going to happen to premiums here, and what the local government response will be to having to rethink the way they release land.
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