IAG says it won't offer ongoing insurance for properties in Category 3 of the Government's Land Categorisation framework in regions hard hit by extreme weather earlier this year, customers with properties in Category 2P and 2C could see changes to their insurance, and for properties in Category 1, IAG will consider flood risk and landslip hazards that might impact customers' premiums and excess.
The Government announced the Land Categorisation framework for properties damaged in Cyclone Gabrielle and the late-January floods in the upper North Island. IAG is New Zealand's biggest general insurer and includes the AMI, State and NZI brands.
Wayne Tippet, IAG's Executive General Manager of Events Response, says the insurer has moved as quickly as possible to clarify its position. It's contacting customers in impacted regions who have made an insurance claim, to tell them how the Government Land Categorisation may affect their ongoing insurance cover.
"The local councils in each area; Te-Matau-a-Māui Hawke’s Bay, Tūranga-nui-a-Kiwa Gisborne, and Tāmaki Makaurau Auckland, are at different stages of consultation and confirmation of land categories. However, customers whose land is considered to be high risk for future flooding or landslip damage and no longer thought to be safe for residential homes – ie Category 3, will receive a voluntary property purchase offer from their local council," says Tippet.
"IAG has made the decision not to offer ongoing insurance for properties in Category 3. Councils have identified Category 3 properties as being at high risk of damage from future weather events and so those residents are being encouraged through this categorisation process to reside elsewhere."
"We want to reassure these customers that cover won’t be cancelled immediately and that we will continue to provide cover until the voluntary sale of the property to the local council is completed, or when the offer expires or is rejected," Tippet says.
He says homes that are a total loss will have cover cancelled as part of the usual claims settlement.
"Customers with properties confirmed in Category 2P or 2C – managed risk, may see changes to their insurance to reflect the risk of damage from future severe weather events, including to the premium and excess. Any changes will be made at the policy’s next renewal and are part of our normal process to evaluate the risk, then determine the terms and conditions for any insurance cover provided, as we do throughout New Zealand," says Tippet.
"While insurance cover for properties in Category 1 won’t change based solely on the category, we will still consider the flood risk and landslip hazards of the property that could impact the premium and the excess. Again, this is part of our normal process to evaluate the ongoing risk of providing insurance."
19 Comments
Not for long. Councils have left it for decades and decades to insurers to be the first mover. Now that insurers are seen as the bad guy, government will have more confidence to move because insurers have become the fall guy.
Never mind the fact that these hazards have been predicted and occurred for ages, or that NIWA have looked at the most recent data and reckon that high rainfall events are now happening 1.9-2.2x more often than previous. The implications of that in assets and land in the way of water cannot be underestimated
Exactly the council has 1000's of "experts" employed, yet consented theses areas to be built on and expected the insurers to protect the property owner going forward. Now they are pulling back and the council is exposed for what they have really become, collecting rates to pay bloated salaries and service a every increasing bureaucratic system.
makechange; suggest that's not entirely fair. Widespread acceptance of CC being real is a relatively recent thing, councils couldn't reasonably be expected to have anticipated that 'decades and decades' ago. The ChCh city council fought developers very hard to prevent a subdivision in an eastern seaside location but deep pocketed developers defeated them by appealing to higher courts. It was known that this site would perform very badly in an EQ and so it proved. Councils haven't had the resources to fight marginal development proposals. Finally though the long overdue hazard prediction tools now being issued by councils is making some serious headway against entrenched vested interests.
This is just the start of the insurance retreat. The insurers that reduce their risk the most will have a significant advantage when it comes to reinsurance.
If your home is near ground water level or built on sand then chances are you will struggle.
No insurance = no mortgage.
Auckland hazard maps are here:
https://aucklandcouncil.maps.arcgis.com/home/item.html?id=cf0849079f414c84b7b61f7bdaeaac5d
Bailouts for the uninsured. How many others like this?
https://www.newshub.co.nz/home/new-zealand/2023/09/cyclone-gabrielle-si…
I have been involved in the claims in Te Karaka.
The help to the uninsured homes was generally from the Iwi. But no doubt there was some tax payer money from the council thrown in.
Pretty terrible reporting. The insurance companies are helping tens of thousands of people and businesses throughout NZ due to the storms. The insurance companies pay the insured once a reasonable quote has been agreed, it is up to the home owner to find a builder to do the work. The insurance companies have their own preferred builders - but they are fully booked for the next 12 months.
The Iwi is hyper focused on 90 houses, sounds like money is not a concern, so I'm not surprised they are better off so far.
What's not mentioned here is that IAG won't underwrite new policies on Category 2 houses.
IAG said it would provide no new insurance on homes rated as either category 3, or category 2 by the government and local councils after floods and cyclone, even though some category 2 homes were considered repairable.
From this article: IAG begins climate insurance ‘retreat’ | The Post (waikatotimes.co.nz)
This will create a lot of pressure for these homes to be bought out too (and there are a lot more cat 2 houses). Otherwise these property owners will be effectively locked in (or unable to sell without taking a large loss) as a new owner will struggle to insure the property.
This is not a new initiative. Insurers have been reducing cover for disaster prone properties since the ChCh EQ over a decade ago. In eastern suburbs land elevation dropped significantly and soon after flood cover started to be increasingly restricted with today a good number of such properties uninsurable. Many became lower cost rental accommodation with owner landlords going without insurance. The market has efficiently facilitated the necessary retreat. Painful for those impacted but also predictable for a long time that this day would likely arrive.
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