If you were asked to design a landmass which featured the widest possible range of geographical and geological terrain, extreme weather and natural hazards, you’d be hard pressed to conjure up something as fraught as our homeland is.
Now imagine someone asking you where the safest place in New Zealand might be to live, considering all the physical forces at work. Where is an area with a relatively benign climate, stable hills and soils that is far from an eroding coast, a flood-prone river valley or basin, an active fault zone or sleeping volcanoes, or all of the above?
Realistically, taking all of those physical influences into account, we can pretty much discount the South Island straight off. Earthquake, erosion, flooding, snow and severe gales, landslips — you name it, we’ve got it.
Cross Cook Strait and things don’t really get any better. Now you have volcanoes to add to the mix. However, one school of thought is that the nation’s safest area away from all natural hazards may be parts of the Waikato, although even that is not far from the volcanic plateau.
No wonder New Zealand is something of a nightmare to insure. And that’s without even taking into account the most insidious threat facing us all — climate change.
As the risk of loss or destruction from any or all of the above rises, the cost of insurance for Kiwis will keep going up. At some point, insurance companies will either deem certain places uninsurable, as we are starting to see now, or else lift their premiums sky-high, effectively saying "if you want to live there, then...".
It’s a blunt instrument for sure, but one we are going to see more of in the years ahead. Pragmatically, it may end up actually sending the right signals about the follies of building right on the coast or along rivers which flood frequently.
Although the decision-making process around one street being insurable and the next uninsurable may seem rather arbitrary, we hope it is based on solid information, robust and long-standing sets of data, and authoritative policy advice. It would be concerning if instead it was the result of haphazard thinking and knee-jerk reactions.
In the past week or so we have heard of several insurance companies refusing to offer cover in some high-risk places. Some of these make a certain amount of sense, but other examples appear a little random.
AA Insurance has been in the headlines for putting a stop to new policies. First, we heard about Westport and Carters Beach, where there are understandable concerns over high flood risk from the Buller River. Next came news of Woodend, Lincoln and Rolleston being excluded because of earthquake risk, followed by Blenheim, Renwick and Seddon for both flood and quake risk.
Somewhat curiously, however, given Westport’s exclusion, is that insurance is still being offered for South Dunedin, which is highly at risk of flooding after heavy rain. The low-lying suburb has been the focus of several warnings in recent years from insurers that coverage will be jeopardised unless that risk is reduced.
On Wednesday came news that Tower Insurance would not insure an Outram home because it had been identified as in danger of flooding. The company said it looked at addresses when assessing risk and did not have blanket bans on towns or regions.
It is likely these cases will be the thin end of the wedge as climate change brings more extreme storms to our shores more frequently. Then there is the unedifying likelihood of a major magnitude 8.0-plus Alpine Fault earthquake, forecast to have a 75% chance of occurring in the next 50 years.
After something like that, the real concern will be that whole regions of the South Island, not just neighbourhoods or towns, may become uninsurable.
