Insurance Council warns you will not be insured for coastal flooding

Thanks to local resilience group T3, Thames was fortunate last week to hear a talk from the CEO of the Insurance Council of New Zealand Tim Grafton about what climate change and sea level rise means for the insurance cover for your house or business.

Although Mr Grafton delivered his message with a reassuring smile he nonetheless stated very bluntly that as destructive sea flood events become more frequent, insurance companies will steadily raise insurance premiums and excesses, and eventually will withdraw cover for flood damage.

How soon this “insurance retreat” may play out will largely depend on how quickly the Jan 5 storm surge type events, or worse are repeated.

He also warned that banks will begin to shorten mortgage terms and will ultimately refuse to lend at all on at-risk coastal properties, causing values to plummet.

These trends are evident in the US where research (Wall Street Journal – 21 April) has concluded that coastal homes that may be flooded with just 0.3 m of sea level rise are already selling at a 20% discount.

Mr Grafton confirmed that coastal flooding due to sea level rise (not erosion or tsunami) is by far the greatest risk for coastal property and infrastructure around the entire Coromandel Peninsula/New Zealand coast.  

These warnings come from a conservative business leader of a for-profit industry which relies on an accurate assessment of climate and other risk to survive. If you are contemplating buying or renting property on the coast, you would be a fool to ignore Mr Grafton’s warnings.

Mr Grafton implored councils to halt further development on low-lying areas, to prioritise urgent research into which places are most at risk from coastal flooding, and to commit sufficient funding to engage with local communities and agree on mitigation options.  

For those of you who missed the talk in Thames, these short YouTube clips of a recent interview Tim Grafton had with Corrin Dann from Q&A will bring you up to speed.

on the frequency of storm tide events   

on “insurance retreat”  

on what needs to be done by councils and central government to make sure we adapt  

there are also some great links, if you want to find out more on this page