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Insurance Taskforce recommends shift of focus

NEWS RELEASE

5 November 2019

Wellington Mayor Andy Foster has today released the Mayor’s Insurance Taskforce discussion document, which looks at ways to address increasing uncertainty in the city’s insurance environment.

The Taskforce, which included expert advisors from the science, engineering, insurance, law, and academic fields, as well as, apartment owners and property developers, was convened in response to growing anecdotal evidence about cost and availability of insurance for some in Wellington City.

The Taskforce has identified that there needs to be a move away from the current model where earthquake risk is transferred to insurers to a more balanced blend of “transfer, mitigate, accept and avoidance” of seismic risk.

“New Zealand has one of the highest levels of insurance cover in the world. But we may not be able to rely on insurance so much in future to address all property risk,” Mayor Foster says.

“Insurers have learned some painful lessons from the Christchurch and Kaikoura earthquakes and, while we might not like what they’ve told us, we can’t afford to ignore the signals we’re being sent.

“In future buildings have to be more resilient, and built in less risky places. Our building code rightly sets out to save lives in an earthquake, but that’s not enough. Buildings themselves need to be usable so we can recover quickly, fix things up and get our economy back on its feet.

“We can’t achieve this by ourselves. We need central and local government collaboration, and the support of developers, building owners, the banking industry and insurers themselves. We’re currently planning for Wellington’s growth, so now is the perfect time for us to be having discussions around the community’s appetite for living with risk and insurance; and the trade-offs we might need to make.”

The Taskforce proposes establishing an integrated Wellington risk leadership group to oversee an agreed implementation plan. It could be co-chaired by the Mayor of Wellington and the Minister with responsibility for the Earthquake Commission.

It also proposes immediately commissioning research to determine if building owners (and particularly bodies corporate) are not taking out insurance because of price or availability issues, and trends or factors that might indicate systematic under-insurance of Wellington households.

The Taskforce had earlier flagged an option investigate increasing the EQC cap to $400,000 in order to reflect the original intent of EQC. This is proposed to be in addition to risk reduction and mitigation rather than as an alternative to better buildings on better land.

“We will of course rely on ongoing the best available science and engineering advice to grow the City’s understanding of risk and resilience,” Mayor Foster says.

“The Taskforce recommendations will go to the Minister of Finance and we look forward to working closely with the Government and others on the issues.”

http://img.scoop.co.nz/media/pdfs/1911/J009782InsuranceTaskforceRecommendationsFinanceMinisterPagesFinal....pdf


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