The Minister of Commerce and Consumer Affairs says the increase in severe weather events means the New Zealand insurance industry “has a more important role to play than ever”.
But he doesn’t think the government can do much to protect underinsured consumers.
The comments were made by Minister Andrew Bayly at the Insurance Council of New Zealand’s annual conference held at Auckland’s Hilton Hotel on Thursday.
The Insurance Council’s outgoing CEO Tim Grafton introduced Bayly to the conference before his keynote speech, describing him as “the closest we have to the Minister of Insurance”.
Grafton told attendees that if New Zealand didn’t meet the challenges of climate adaptation then the affordability of insurance would be “acute for some”.
He added the insurance industry already knew insurance affordability was at an acute stage for some people already.
“[If] we do nothing it will be far worse and will most likely attract market intervention, perhaps by government, and the market may well be less attractive to international capital,” he said.
Bayly said it was clear that as a country, New Zealand needed insurance security “more than ever” as the country faced down increased frequency and severity of climate change events and natural disasters.
“It’s evident we need to remain adaptable to meeting the evolving needs of kiwis, kiwi businesses and New Zealand itself,” he said.
“The insurance industry has a big part to play in that.”
Sitting down with conference MC Miriama Kamo after his keynote, Bayly was asked what the government was doing to protect underinsured consumers.
‘I'm not sure we can do much about it,” he replied, saying statistics showed that New Zealand was “pretty highly” insured from an individual basis of people.
Bayly said the bigger issue was rather than thinking about how the government could incentivise people to take up insurance, the role of government should actually be making sure that councils didn’t allow houses to be built on coastal areas or floodplains that were known to flood.
In response to a question about how large climate events were affecting New Zealand’s vulnerable sectors of society more severely due to not being able to afford insurance, Bayly said New Zealanders needed to be made wealthier.
“Poor people buy cheaper houses and cheaper houses are cheaper for a reason, often because they're in areas that are not as attractive for a whole range of reasons,” Bayly said.
“The main intervention is that we need to make New Zealanders wealthier.”
Bayly also said the government needs to be clearer around how it plans and deals with climate risk so reinsurers have more insight into the country’s climate change resilience and adaptation.
He’d been told by the insurance sector that reinsurance costs were skyrocketing in part because reinsurers felt there wasn’t enough clarity around national responses to severe weather events in New Zealand.
“I think there's probably an element of government being clear about what our policies are and working with councils and the insurance industry,” he said.
Kamo asked; "How worried are you [about climate change]?”
“If you want to see where climate change is happening, go to the North Pole,” he said.
In a panel about climate resilience after Bayly’s speech, IAG New Zealand’s CEO Amanda Whiting said IAG had five themes they kept in mind when discussing climate resilience – education, planning, connectedness, control and acceptance.
“It's actually really important if we're going to do all these things, we all have to accept that actually some will be winners and some will be losers, and that might be the impact of higher rates. It might be going as far as actually being removed from your home,” she said.
“What I think we need and what we've been lobbying for is some sort of horizontal view to pull all of those great pieces of work together. And I think central government can play a really important role in that.”
46 Comments
When he was asked if he believed in climate change - he says 'yes' - go and look at the North Pole (i.e., ice melt) as an example.
Which is a deflection (likely subconscious) away from the impacts of climate change right here, right now as being experienced in New Zealand. He is after all, talking about NZers and the high cost of insurance.
It's a classic right-leaning type of reaction - i.e., as NZ is such a minute percentage of overall GHG omissions - it's really not our problem. It's effectively their excuse for not needing to address the issue locally (i.e., in country here).
So, that's what I mean by subconsciously - he really doesn't even realise that in that being (the North Pole) his answer to the question - that he is in fact deflecting. It's all a part of the right-leaning, self-interest ideology (i.e., not our problem - we just need to act in our own self-interest and all will be 'right').
Does that kind of explain it?
"Extreme weather...". What a laugh.
In 1965 I had a teacher, Ernie Crane, who was holidaying at Muriwai with his family. There was a colossal amount of rain and his wife and one of his daughters were killed in a landslide, but there was nothing about "global warming" in the news. It was just a low pressure area passing through.
https://www.researchgate.net/publication/358460087_The_tragic_1965_Muri…
Because it's not PC to deny global warming, even though there isn't a single example of climate disasters where I live.
The Labour Govt was the worst example of perpetuating this nonsense, and the answer of course was to make kiwis pay via more taxes. More taxes...music to the ears of money-hungry socialists.
So where do you live?
Nonetheless, just because it's not warmer in your backyard doesn't mean climate scientists are wrong about climate change.
We are having a lot more 1 in 100 year floods than we should have, given it's hardly been 100 years since the last one. Have you noticed your insurance premiums increasing?
We had some huge flooding in front of my house last year. It floods a couple of times a year normally, but last year it flooded about 4 times. The reason? Above average rainfall, lots of new housing in the area (roof water runoff) and the river blocked with weeds...quite simple.
This year there's below average rainfall. And there's more weeds growing...big time.
Yes my insurance premiums have increased, and it's insurance companies using the global warming scam to increase them.
he is discussing the issue of building houses in the right areas.
That too, B-Rocker is another deflection (a kind of rose coloured glasses) - in most of our urban environments, there are no more "right areas". As with any urban development, the high ground gets developed first - low ground next - and peat land/swamps and estuarine environments, last.
Basically, he's trying to say there is still plenty of good land to be developed (i.e., we just need to develop the non-flood prone, stable areas in future), when the non-flood prone, stable land has, for the most part, been built on already.
CONF. Yes, meaningless bordering on insulting. He will be well aware of the numerous cases of slip and bush fire prone houses expensively built by wealthy people who favour such locations but are wisely don't seek publicity when it turns to custard. But the correlation of poverty with flood exposure is valid. Pious handwringing from the insurers; their low profile strategies to slash their exposure by retreating from high risk areas aided, finally, by more muscular council consenting and designation policies are already well underway.
The article must have been updated since you made that comment. He actually said 1) that govt's role should be making sure councils don't allow houses to be built in inappropriate areas, 2) that people buying in inappropriate areas is an affordability issue, hence the comment about making people wealthier, and 3) that govt should provide better clarity regarding national responses to events.
Not sure how else to avoid this issue (of creating better housing in more sustainable areas) other than with people being able to afford to buy in those areas. Unless you would prefer the govt to underwrite insurance where homeowners are unable?
New Zealand is a serf economy where poverty is perpetuated by uncontrolled low wage immigration that suppresses wages while increasing house prices. It has been this way for decades under all shades of government and there is no rational or realistic hope that it will ever change. The only way for the majority of Kiwis to get more wealthy is to leave New Zealand.
Ever since the labour market became global, the same issue is occuring seemingly everywhere. You can't introduce billions of extra low paid workers while retaining or increasing the value of the existing labour.
It was pitched as "all the low end primary and secondary jobs can be done somewhere else and y'awl can level up to big money in the tertiary sector". It's happened for a few but the rest have been devalued.
Not sure how that could be reversed. The manufacturing base has gone, and people won't want to pay 80-100 bucks for a t shirt their fellow citizen made.
Rather than moving, anyone would be better served finding a function in their local market that is under-represented and pays better. Or living somewhere with significantly lower cost of living, while working remotely for a territory with higher wages.
We're not. Top 3rd most affordable actually.
https://www.numbeo.com/property-investment/rankings_by_country.jsp
That's not to say it's cheap here, just that there's very little unique about declining wealth and home ownership rates in NZ.
And it's not just the house prices that determine where's best, most Kiwis would be worse off in many of those countries with "cheaper" houses.
Much tiresome bleating about declining home ownership rates in NZ. Given approaching 30% of NZrs were not born here it's surprising HO rates are not lower. Comparisons with previous eras when the country was not being flooded with low quality/low wage migrants many of whom, unsurprisingly, cannot afford to buy a home, are meaningless. Ditto wealth equality. It's nonsensical to assert it's somehow unfair that intergenerational NZrs are holding more wealth than more recent arrivals.
“The main intervention is that we need to make New Zealanders wealthier.”
Capitalism will always have a triangle of wealth with a wide $0 bottom (<$0 get bankrupted) and a few very rich.
i.e. there will always many poor who are only going to ever be able to buy the cheapest of houses. (The rentals they can afford will also be the worst conditioned houses)
The only way we can make the poor relatively wealthier is to:
a) manage the immigration rate down to a sustainable level to reduce excess housing demand
b) mass produce thousands of houses/apartments with AI factory robots so that the construction cost plummets (NZ house building is so so inefficient)
c) zone heaps of land so that land prices plummet.
The politicians are supposed to be the grown-ups in the room explaining the benefits to the country as a whole (even including the vast majority of those who just own their own home).
Sadly, the few who actually would be harmed are over-represented in Politics and Media.
Pathos. Not so sure. If you are talking about land speculators who lose money because of a change in market conditions, they are few in number and don't tend to publicly grizzle. And for every one who craftily locked up land awaiting (now much reduced) capital gains there will be as many others whose newly rezoned land delivers an unexpected bonanza, albeit nowhere near as much as under the previous regime.
mass produce thousands of houses/apartments with AI factory robots so that the construction cost plummets (NZ house building is so so inefficient)
This technology doesn't exist in a way that makes house building cheaper.
There's also inventions like brick laying robots. It works, but it's less efficient than having an experienced brick layer.
We can build houses cheaper, if it were done at scale using unified designs.
The top 1% will always be the most wealthy by definition they know how to play the game best.
IMHO we would have a better society if the middle 90% had cheaper housing and more disposable income left over to spend on lifestyle, education recreation etc etc... (like our parents did.....).
Sadly the bottom 10% have many issues that mean they cannot really compete in a capitalistic society, some via drugs violence famliy dysfunction etc etc etc, only an idealist could believe that simple solutions could change this.
I sadly believe the best thing my kids can do is get the degree and head off overseas for experience and decent salaries, they can return for the bach if they want, but they may well find Aussie has more going for it and less social tensions.
We need to make KiwiSaver compulsory now for all as they turn 18... needs to be 5% contribs from them and 5% from employer. No point beleiveing we can put this off. Aussie has so much going right for it... labour or conservative govs
" the role of government should actually be making sure that councils didn’t allow houses to be built on coastal areas or floodplains that were known to flood."
He can't have spoken to his colleague Chris Bishop who just wants lots more houses, more urban sprawl and to hell with any concerns over flood plains.
What's your definition of 'poor'? There's plenty of opportunities for kiwis to end up reasonably well off, but many squander those opportunities.
Breeding like flies, kids breeding more kids, spendthrift, multiple partners, lack of education, skill or apprenticeship, work shy or just downright lazy and looking for the next handout.
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