Labour Finance Spokesperson Barbara Edmonds says New Zealand needs to show insurers the country believes in climate change and is taking climate adaptation seriously.
Speaking at the last day of the Financial Services Council's conference, insurance was one of the main focuses of Edmonds’ keynote speech where she noted insurance plays a key role in ensuring financial stability.
Edmonds was a tax lawyer before she became an MP. During the previous Labour-led Government her Ministerial portfolios included –among others – Revenue, Economic Development, Internal Affairs, Pacific Peoples and Associate Finance and Associate Cyclone Recovery.
“Many of you have seen and experienced a huge increase in insurance premiums over recent years,” she told conference attendees on Thursday morning, going on to say that the extreme weather events NZ experienced in 2023 showed there was a need to “future proof” the country’s infrastructure.
New Zealand’s two biggest general insurers – IAG NZ and Suncorp NZ – both reported massive growth in annual Gross Written Premium (GWP) in August. GWP is the actual premium less all premium refunds and rebates.
IAG NZ’s GWP jumped 15% to NZ$4.12 billion in the 12 months to June 2024 while Suncorp NZ’s GWP rose 17.3% to $2.8 billion in the same period.
Statistics NZ's Consumers Price Index showed insurance costs up 14% in the June year.
“As we experience more frequent extreme weather events and there is a greater transition to risk based pricing for insurance, we should expect premiums to rise, especially for exposed communities,” Edmonds said.
Edmonds said If insurers stopped providing insurance cover, then banks would be unlikely to provide finance – which would mean the Government may be required to act.
She added that insurers hadn’t anticipated the losses from a flood in Auckland and never expected a cyclone of the level insurers saw in the Hawke's Bay region from Cyclone Gabrielle.
The Insurance Council of New Zealand (ICNZ) said in July $3.3 billion has been paid out by insurers so far from damages and destruction caused by the Auckland floods and Cyclone Gabrielle.
“These types of events were not in their modeling, but now they are, insurers and reinsurers look at what governments are doing to help adapt to climate risks and quite frankly, they're not kind of seeing that much from this government,” Edmonds said.
“Earlier in the year, Suncorp called for enhanced central coordination on climate adaptation. But what has this government done? They canceled the National Resilience Plan and the Climate Emergency Response Fund, both of which were helping communities adapt to the changing climate and investing in resilient low emissions infrastructure.”
The Finance and Expenditure Committee is currently undertaking an inquiry around climate adaptation and will be providing recommendations and principles on the framework to Climate Change Minister Simon Watts later this year.
Under the previous Labour Government, work on a climate framework had been done under the Environment Committee Committee.
Edmonds said on Thursday the Treasury had stated that climate change is “perhaps our most significant risk to the sustainability of our wellbeing as a country”.
NZ needs to show to insurers that the country believes in climate change and is taking climate adaptation seriously by understanding and mitigating natural hazard risks, she said.
“As a nation, we must integrate resilience and climate change considerations into every aspect of our infrastructure, planning and decision making processes so that insurers can be confident the government is working to minimise risk.”
Insurance Council of New Zealand Chief Executive Kris Faafoi told the Finance and Expenditure Committee in July that NZ's increase in natural hazards is impacting the cost and availability of reinsurance, which in turn is affecting the cost and availability of general insurance across the country.
NZ needed to be sending “strong signals” it was doing everything it could to prepare for and reduce climate risk in order for reinsurance markets to continue to have confidence in NZ.
“Maintaining that reinsurance is vital for our economy,” he said at the time.
18 Comments
NZ is located in troubled waters and is not called the shaky isles for no reason. This century EQs, cyclones & near to, wild fires for example only amplify that fact. Regardless of whether or not global climate change is worsening the situation, the measures that NZ is undertaking, tree planting, self imposed emission reductions and on, will not reduce the incoming impact from the activities of the giant industrial nations. Therefore the logical strategy must be to set the defences as early and efficiently as possible.
... we are tying ourselves up in knots & hamstringing our economy if we keep future proofing against " black swans " ... our paranoia over " climate change " is providing insurers with a golden opportunity to fleece us , as indeed they are ... good obedient little sheeples that we are ...
Hahaha, that's quite funny NK. Just like our big 4 banks being some of the most profitable in the world....
- Cummins, J. David, and Mary A. Weiss (2000): Research related to the effects of market concentration on profitability in the insurance industry.
- Adams, Mike, and Martin Buckle (2003): Study focusing on financial structure, performance, and profitability in insurance companies.
What 'extreme weather events'?
There hasn't been any where I live. Global warming's proving to be one of the greatest herd behaviour episodes in history.
Posters here tell me house prices are going to come down. How, with more of this BS being peddled by politicians at every opportunity?
Y2K was the trial run
Human impacts on climate change have been known for decades (publicised since the 1970s), largely ignored by politicians until they worked out new ways to tax it...
Weather here has always been "variable": we need to adapt
Acid rain was a thing in Europe until pollutants that caused it were legislated out. The end result being that acid rain stopped being a thing before the end of the 1980s.
Banning of CFCs as accelerants in aerosol cans had a major impact in reducing the erosion of the ozone layer. Again, well before the turn of the century.
Oil is not an infinite resource so logically it has to run out one day. Just not as soon as some have calculated - maybe more efficient use of oil in the past 40 years has slowed things down, as well as the extraction of oil from locations previously thought impossible.
Lucky for you not to have seen droughts , floods or tornadoes increasing in the past 20 years. Have you not noticed a significant increase in car and house insurance or do you not own either?
Yes, I am being ripped off by insurance companies, and if there was an investigation, I'd be interested to know whether there's any collusion between them. There's certainly a lot of discussion about it.
I often wonder what happened to the 'we're running out of water' mob, and the ice caps melting by the year 2,000.
I've got several books on human gullibility, swindles and speculative manias. Goldbugs would be amongst the most susceptible to scams and media nonsense. They're always banging on about the most unbelievable, bizarre events that are going to send gold "to the moon".
Thousands of 'scientists' converged on Dubai last year for COP 28. They flew to one of the globes biggest oil and gas producing states in hundreds of private jets, creating the biggest single carbon event in history.
Hard to believe. And they're climate 'scientists'. Hahaha.
I know all about conspiracy theories, I've got books on them, they're very entertaining.
'Scientists' go to Dubai in private jets to talk about global warming. And this year it's in Baku, in another oil and gas producing state. Baku isn't Dubai, so it'll probably require dozens more private jets to get there.
https://scroll.in/article/1060005/cop28-delegates-flew-in-on-private-je…
70000 people attended COP28 to decide how to limit other peoples carbon footprint, hundreds in private jets.
Zero credibility.
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