Insurance premiums are expected to rise as coastal properties are being evaluated for individual climate change risk.
A report by the environmental and engineering consultancy Tonkin and Taylor on coastal hazards released last week showed that nearly 25,000 Christchurch houses are at risk of future coastal flooding and 1,000 are at risk from coastal erosion, according to the Star Kiwi.
Insurance Council chief executive Tim Grafton said each insurer would take a different approach to risk, depending on the frequency and consequences of flooding.
“With respect to climate change, the price signals are likely to be incremental changes over time, rather than swift and rapid change. There is therefore time for a range of adaptation measures that make economic sense to be considered which ... enable the transfer of risk to insurance to remain affordable and accessible.”
Some properties could become uninsurable if they flooded with high frequency, Mr Grafton said. “They become less insurable as it becomes more certain that they will flood.”
He said New Zealand was unusual in offering all-perils cover house insurance. “In many other countries, flood is an optional add-on to house insurance policies, so flood risk is separately priced.”