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Residential flood insurance issues

The Government is considering residential flood insurance issues in the context of increasing risk-based pricing and underlying risks being exacerbated by climate change

There are two issues playing out in insurance markets. Insurers have access to better data and are increasingly able to more granularly price flood risk (also known as ‘risk-based pricing’). Underlying flood risk is also increasing due to climate change. These both challenge the insurability of some assets.

Any reduction in the role of insurance in managing flood risk has implications for the resilience of New Zealanders to those risks.

The Government has a choice about how it wants to respond to these insurance issues.

In April 2022, Cabinet invited the Treasury to consult on these issues and to examine options to intervene in the insurance market. This work sits alongside policy work on climate adaptation, which indirectly supports insurance access and affordability.

The Treasury has undertaken both general and targeted public consultation on this issue. This included consultation via the draft National Adaptation Plan (“NAP”) process (see “The role of insurance in responding to flood risk” section in the draft NAP and the report that summarises the views submitted on the draft NAP). 

Work on this issue is still ongoing. This webpage will be periodically updated as policy work develops.

Key documents

The following Cabinet material has also been published by the Treasury:

Last updated: 
Friday, 2 December 2022