Major insurers yesterday praised the "proactive and data-driven" climate change adaptation programme under way at the Dunedin City Council and Otago Regional Council.
Without the billion-dollar proposals outlined by the councils’ South Dunedin Future programme to reduce the impact of potential natural hazards, the future for the low-lying suburb appeared uncertain at best.
Suncorp New Zealand executive general manager Jane Brewer said South Dunedin Future’s updated risk assessment and the seven potential adaptation options released today would help the community better understand how climate change could aggravate natural hazard risks, and help locals make informed decisions.
South Dunedin was known by insurers as being high risk for flooding, and the reports released today said without intervention the area would continue to suffer from regular and severe flooding.
"Currently, we offer insurance cover in the area, although some properties will have higher premiums or tailored excesses due to their higher flood risk," Ms Brewer said.
"Under the status quo option, if flood risk worsens as projected, then property owners will face the risk of cover becoming more expensive, limited or even unavailable in the future.
"Insurers, and the global reinsurers that we rely on to offer cover, want to see New Zealand communities planning for a more resilient future."
Suncorp, which includes Vero and AA Insurance, was encouraged to see the city "actively tackling these difficult conversations in a thoughtful, proactive and data-driven way".
The company was keen to collaborate with projects like South Dunedin Future, to ensure local governments developed a good understanding of the potential insurance impacts of their choices as they worked to temper the effects of natural hazards on local properties and people, she said.
IAG New Zealand chief executive Amanda Whiting said the two reports released today were "a critical step in securing a more resilient and insurable future for South Dunedin" and the company, which offered insurance under AMI, NZI, and State Insurance, was eager to be part of the process it outlined.
Ms Whiting said the company insured many homes and businesses in the area.
"Some residents will be concerned about what this information means for their insurance, and we want to take this opportunity to reaffirm our support for home and business owners in the community.
"While the risk assessment released today by the council shows a challenging future for the community, it does not change our overall view of the risks it faces or our willingness to provide insurance.
"While insurers are moving to reflect risk at a property level in their premiums across the country, this particular risk assessment will not be a major influence in our pricing decisions for South Dunedin."
Tower Insurance acting chief executive Paul Johnston said the company was committed to working with both local and central governments, and the wider industry, to ensure people could continue to access affordable insurance in the face of increasing climate change and related weather events.
Mr Johnston said discussing options around infrastructure investments, introducing waterways and managed retreat were "important and complex conversations".
He praised both the city and regional councils for their work towards understanding the climate-related risks confronting South Dunedin and the "options to empower meaningful action".
"We hope this report is the catalyst for similar action across the country" he said.
"In the face of increasing frequency of natural disaster events, doing nothing is not an option.
"It is morally indefensible to wait for natural disasters to occur before protecting lives and properties, and that’s why we must collectively take action."
Tower paid out $3million in claims following the October flood, and continued to insure properties in South Dunedin, he said.
"Our risk-based pricing approach allows us to offer competitive rates to individual properties with lower risks, even if they are within higher-risk areas.
"However, this may not be sustainable indefinitely."
An Insurance Council of New Zealand spokesman said insurance was usually reviewed on a 12-month basis and insurers were continually evaluating how risks were evolving.
The actions taken to reduce the impact of climate change on communities would be one of the factors that insurers took into consideration when assessing risk.
"We have consistently called for a collaborative approach, led by government, to find solutions to help reduce risk and protect communities and ensure that insurance is affordable and accessible," the spokesman said.
