July 17, 2025 • 19 mins
Could the Government be taking a step back from helping homeowners after the elements make their homes unliveable?
Recent extreme weather events have prompted a rethink of government housing protections.
Billions of dollars have been spent over the years on buying out homes after natural disasters.
But, in a changing world, and climate, where these events are happening harder and faster, is the idea of the Crown stepping in with unlimited cash unsustainable?
Today on The Front Page, Insurance Council chief executive Kris Faafoi joins us to explain what the future looks like for homeowners.
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You can read more about this and other stories in the New Zealand Herald, online at nzherald.co.nz, or tune in to news bulletins across the NZME network.
Host: Chelsea Daniels
Editor: Richard Martin
Producer: Ethan Sills
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Gielda.
Speaker 2 (00:05):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast.
Speaker 1 (00:10):
Presented by The New Zealand Herald.
Speaker 2 (00:16):
Could the government be taking a step back from helping
homeowners after the elements make their homes unlivable? Recent extreme
weather events have prompted a rethink of government housing protections.
Billions of dollars have been spent over the years on
buying out homes after natural disasters. But in a changing
(00:39):
world and climate where these events are happening harder and faster,
is the idea of the crown stepping in with unlimited
cash sustainable? Today on the Front Page, Insurance Council Chief
Executive Chris Farfoy joins us to explain what the future
looks like for homeowners.
Speaker 1 (01:04):
Chris, the government's.
Speaker 2 (01:05):
Historically stepped in after natural disasters to buy properties. This week,
Christopher Luxon has said that the government won't be able
to keep bailing out people in this way.
Speaker 1 (01:17):
Does this come as a surprise to you, that's.
Speaker 3 (01:20):
On the first time we've heard that from the government.
I think, regardless of which stripe, you are the appetite
for continuing the kind of buyouts and that we're seen
over the last decade and a half are starting to wane.
From our perspective, that's a government decision to make. But
also from the insurance perspective, if they're going to invest,
if they're going to spend tax payer money, then instead
(01:43):
of paying out after an event has happened, we'd prefer
that you spend that money to protect the communities and
that we're seeing being devastated by these kinds of events
on a relatively regular basis. Obviously, that can keep those
communities safer. But from an insurance perspective as well, it
just uses the risk and that's what our members used
the price, and if we can reduce that risk, we
(02:05):
can keep the insurance more accessible for keys.
Speaker 2 (02:08):
Yeah, if we're in a situation where the government does
pull the pen entirely on buyouts, where does that put
private insurers?
Speaker 3 (02:17):
And essentially in the same situation we continue to pay
out of people have got insurance policies. We did that
after Walking Anniversary and cyclone. Gabrielle that the difference here
is buyouts usually we have done the land or the
location of the incident is so bad, the risk is
so high, usually to the life that the local council
(02:40):
and the government agree that people shouldn't really live there anymore,
so people will still get an insurance pay out, but
the councilors and the central government also put their hands
in their pocket and say it's not possible for you
to live here anymore, and they get compensated through the buyout.
It almost makes insurance more important for people to make
sure that they've got it. Otherwise, if they're dying and
they're in this situation, I've got fewer options. But again,
(03:02):
if the government does go down this path and they
haven't made a decision, I've given some indications this week
around that, then the investment and making sure that communities
are safer because we know these kinds of things are
going to happen more often and have the ferocity of
what we've seen in the last couple of years and
in the last couple of months, then we really need
to make sure we're protecting those communities.
Speaker 2 (03:23):
Do you think we've actually learned any lessons from the
likes of Auckland and what's happened in Gisbon as well?
Speaker 4 (03:28):
Slightly?
Speaker 3 (03:28):
I think you've probably seen the issue around the Taka Bunagov.
Of course, in the last month where the open Councils says, well,
there is flooding risk in that community, to the families,
to the businesses, there's schools, there's rest homes there. So
actually something needs to be done to reduce the impacting
the impact of those kinds of events. So there's some
(03:51):
difficult decisions to be made. We'd agreed with the group
that put out the report last week, that independent reference
group that's given some advice the government that we needs emergency.
We're seeing these kinds of events happening more and more often.
You've seen this appetite four buyots start to wane from
the government. So something needs to happen in the middle
(04:13):
to make sure the communities are safe, that we can
protect from the impacts of the likes of flooding and landslips.
Speaker 4 (04:19):
And also again insurance.
Speaker 3 (04:21):
Is obviously quite important those situations for keepleus to fall
back on. You would have seen in the last twelve
to twenty four months after Gabrielle that people have had
along with everything else, that paying those insurance premiums can
be a challenge and in order to keep it manageable
in the long term, that kind of risk reduction, the
infrastructure getting put in place some difficult conversations, so we
(04:42):
can make sure that if things do happen, we're kind
of lowering the impact of whether those kinds of weather
events is really important to keep insurance accessible for the future.
Speaker 4 (04:53):
Yeah.
Speaker 5 (04:53):
Look, I know the report came out last week. It'll
take time for the government to digest. And you're right,
a lot of the proposals are around climate adaptation and
it's often for twenty years from now and I think
in principle, yes, you can't. The government won't be able
to keep bailing people out in this way.
Speaker 4 (05:07):
You know.
Speaker 5 (05:07):
That's why Simon Watts has worked quite hard to get
a bipartner as an approach with all the parties in
Parliament to say, look, there's going to be governments of
different colors and shoes going forward over the next couple
of generations. This is a long term issue. We need
a proper framework in place to work out whether it's landowners,
whether it's councils, whether it's central government, banks, insurers that
actually have to create a framework for dealing with these
sort of weather events and how we'll handle them going forward.
Speaker 2 (05:31):
When we think about and talk about shared responsibility, and
that's between central government local councils, banks, insurers and homeowners alike.
What could that mean in practice?
Speaker 3 (05:42):
I think you've got a lot of those parts of
the system keen to get ahead of this. I think
if you ask, most of these Islanders don't prefer that
we ate before these events a certainly from my perspective,
the insurance sector is keen to make sure that we
are reducing risk.
Speaker 4 (05:56):
That makes business sense for them, but also.
Speaker 3 (05:58):
For the communities that they cover, keeps some protective I think,
and there's a willingness for banks that we've been talking
to as a sector to get involved in their Certainly
councils I've been indeed earlier this week South of Leedin
is a long term issue and the councils want to
get their heads around this. What can we do, What
are the rules and the tools that central government might
give them. Where's the funding going to come from? None
(06:20):
of this is cheap and it's also very emotional. So
I think what we're looking for is some strong central
government leadership and I think we've seen some good signals
from the Prime Minister this week about what their thoughts
are around buyouts, what their thoughts are around building and
done places, and actually having to tackle this issue to
keep communities safe.
Speaker 4 (06:41):
In the future.
Speaker 3 (06:42):
So we're expecting some policy from the government by the
end of the year and some legislation in the House
to give us an idea of what those early rules
and tools for governments and the sectors that are part
of this, and we're really looking for some strong leadership
so we can kind of start tackling this. I mean,
from an insurance perspective, we want to make sure that
we are affordable to kiwis for the future. But if
(07:04):
nothing is done, if these things keep happening and we're
just status quo, then there's going to be some long
term challenges, not just for insurance, but for communities as well.
Speaker 2 (07:13):
I was thinking about because these climate events are going
to happen harder and faster, and we're going to see
more and more of them, and if the government or
if we don't start making those solutions before things actually happen,
then we then see a world where insurance is just
unaffordable for most kiwis and.
Speaker 3 (07:33):
The extremely with that's the challenge, and that's why we're
pushing so hard that we can do things beforehand to
try and reduce the risk as you say we're expecting
to be more often, we're expecting them to be more
ferocious than if you ask the people of now Stasman
experience of the last month in last that we're seeing
that we.
Speaker 4 (07:51):
Don't want to get into that situation.
Speaker 3 (07:52):
We prefer we've given the opportunity that banks, insurers, councils,
central government and communities can actually work together to get
some of these protections in place, because I think the
worst case scenario is that we don't do anything. These
things happen and you know, you've got asset values of
homes starting to diminish, you've got insurance being a challenge.
(08:13):
That's the fear. But we actually in about ten or
fifteen years time, I think if we can say that
some good decisions were made ten or fifteen years ago
to make sure you can get ahead of this, some
of the communities that are really at risk can continue
to survive and be strong. But I also want to
be really honest, there's some difficult conversations about some communities
(08:33):
have to have as well, and that's where that central
government leadership is really important.
Speaker 6 (08:37):
Because there we're built so many of towns and communities
in flood plains for historical reasons, but yeah, we will
likely have to move some of them. Figuring out how
to do that in a way that's as best for
the residents and for a sense of community and all
of those aspects. There's going to be as a massive
(08:58):
challenge for for local government central government and is a
big focus of a lot of social science research as well.
Speaker 2 (09:07):
Yeah, and are those difficult situations anything to do with
in moving entire towns.
Speaker 3 (09:13):
It could be, you know, in some councilors around the
country have been brave and started to ins towards those
conversations and have some of those conversations with the communities,
and as an insurance sector, we want to support them
because whether they are conversations that need to be had,
insurance might be an aspect of some of those decisions.
But that's where when I say rules and tools for
(09:35):
local government, I think there is a fear from local
government that if they start to make decisions which are
heading in a direction for some of those communities, if
it gets challenged or they kind of find themselves stuck
in long engagements where the communities then nothing will get done.
Speaker 4 (09:51):
And in some places, as it's been evidenced by the buyouts.
Some of these.
Speaker 3 (09:55):
Areas are you risk to life scenarios and keeping in
some of those places is not the wisest thing to
do long term. So instead of having an event to
get to that situation, there is an opportunity for us
to say, hey, look, let's have a good, mature look
at this.
Speaker 4 (10:11):
This is high risk. What do we do here?
Speaker 3 (10:13):
And certainly if counsels think that they're doing that on
the run, they're going to be They're going to find
out a challenge. So getting thanks, as you say, getting insurer,
is having rules and tools for counselors to be able
to have those conversations and being led by central government
giving them the tools to do that. And at some
stage who pays conversation has to come into this as well,
(10:34):
and we think is really.
Speaker 1 (10:35):
Important who does pay well?
Speaker 3 (10:37):
That's where that's the billion dollar question. And at the
end of the day, I think the government will end
up deciding that. The report that came out earlier this
month from the Independent Reference Group, which was advising the
government around well it should do in the adaptation and space,
basically said the beneficiari should pay now in some instances
(10:58):
that might be a community or an individual family or
a business and someone might be able to do that.
I think one of the promising science from that independent
reference group was in some instances, some communities won't be
able to pay, and they send a pretty clear indication
that in some instances central government might have to kind
of chip in and make sure they can protect communities.
(11:20):
So it's extremely complex. I think from an insurance perspective,
we want to see some urgency. We want to see
some clear leadership from central government. We've seen some good
indications of that week from the Prime Minister, and really
we just need to get on with it. There's been
a diagnosis of this issue. We know what's coming down.
The forecasters, the scientists are telling us that the weather
is going to get more extreme.
Speaker 4 (11:42):
People are starting to experience that.
Speaker 3 (11:44):
I'm the scientist, but I think people are kind of
understanding that things in terms of whether are getting much
more challenging. So getting together this is really important.
Speaker 2 (12:02):
When thinking about when the game really changed.
Speaker 1 (12:05):
I always think about the Canterbury earthquakes.
Speaker 2 (12:07):
Right at the time it was the fourth most expensive
ensured global natural disaster ever to happen. That's internationally, and
today it's cost private insurer is twenty one billion dollars.
Speaker 1 (12:21):
EQC paid a further ten billion.
Speaker 2 (12:24):
I mean, if that were to happen tomorrow, how would
we fare because private insurers especially, isn't that still being
kind of paid for?
Speaker 4 (12:34):
Oh?
Speaker 3 (12:34):
Un Thankfully we do have capital requirements, we do have
reinsurance arrangements. So in plain English, reinsurance is insurance that
insurers have. So if a big one line crist you
just to happen, as well as the money that they
have in their capital.
Speaker 4 (12:49):
Requirements, how they call on reinsurance.
Speaker 3 (12:52):
And again I think this is another if we're seen
by those international reinsurers to be taking action to reduce
the risk here in New Zealand for some of these
kind of weather related events stacy, that is a positive.
And we went to visit those re insurers with Climate
Change Minister Simon Watts last year. I mean they liked
the conversations that are happening and happening both our big
(13:15):
parties are talking about it.
Speaker 4 (13:16):
We're expecting some policy.
Speaker 3 (13:18):
We're actually in terms of the international situation, quite advanced
and looking at what we do to reduce risk. Now
as the time as I stay for the urgency, to
make sure we're getting on it so we can keep
those reinsurers happy.
Speaker 4 (13:29):
So if we keep those.
Speaker 3 (13:30):
Reinsurers happy, then their ability to pay out when the
big ones happened is maintained. And that did happen not
only in christ huge as you say, but that also
happened in twenty twenty three when Auckland Anniversary weekend and
cyclone Gabrielle happened. That was a three point eight billion
dollar event for private insurers alone, and the reinsurance got
(13:50):
caught on. But that was also a game changer. When
re insurers looked at New Zealand, traditionally they saw earthquakes,
and then twenty twenty three happened, and then climate related
events also became an issue. So we need to we
need to make sure that we're on top of those
kinds of events that of reinsurance will continue to have
confidence in us and be quite happy to re ensure
the resk that we've got here in New Zealand so
(14:12):
that our members our insurance can pay out when those
big things happen.
Speaker 1 (14:16):
Have you any idea where to start?
Speaker 2 (14:18):
I mean, I know these conversations are going to be
long and hard, but if you looked at, say someone
who lives on a house on a hill and you're
thinking coastal erosion, or is it a town on an
alpine fault, or is it a town in a valley,
Like where do you even begin to have these conversations
with these local communities and as a whole as well.
Speaker 3 (14:41):
That's a really good question because depending on where you are,
the risks are very different. According to Lloyd's where the
second risk is country in the world in terms of
natural hazard risk. So what I think everyone agrees on,
and I hope it's done out of some of the
work that the government's doing now, is we have a
really good national picture of war the risks are, and
(15:01):
the data is uniform across the board. A lot of
councils do have a good idea of what the risks
are in the area and they'll try and tackle that.
Some councils don't. Are smaller, they can't afford that kind
of thing. So what we're asking, and I think we're
getting some good indications for the government, is that we
have a platform that says here's New Zealand, here are
the biggest risks. So then we can all say, from
(15:22):
a central government perspective, how do we prioritize some investment
and risk reduction that the central government can get stuck into.
And also local councilors can say, like, here it is,
here's how much money we've got, and we can start prioritizing.
So I think you ask a good question. If we
try and board the ocean from the outset, we're going
to find out a real challenge.
Speaker 4 (15:41):
It's going to be really costly.
Speaker 3 (15:42):
But I think if we've got a really good understanding
across the board or the data around where those risks are,
if we start with that, then we've got a picture
that everyone can work off. And I think if councils
are given again the rules and how they can engage
and the tools to engage, I think you'll start seeing
local was getting really stuck in.
Speaker 7 (16:03):
My husband had to break down these palings off the
fence so that we could climb out through the back
fence and through the neighbor's property.
Speaker 1 (16:09):
All of her neighbors are in the same situation. The
house at the end of the streets bore the baruns
of us.
Speaker 4 (16:15):
I don't want this for anybody else.
Speaker 1 (16:22):
God it's way.
Speaker 7 (16:23):
It's quite upsetting because you feel like you're kind of
tricked into it because you think if the council gives
consent to build on a piece of land that that
piece of land would be safe.
Speaker 2 (16:36):
Chris, what would you like the government to do tomorrow?
Would it be something like bringing in a law saying
you can't build on flood prone areas or something as simple.
Speaker 1 (16:48):
As that, or I mean, what would you tackle first?
Speaker 3 (16:53):
I might take two or three of it's okay, still
certainly rooms for not building and dumb places. And I'm
heartened by the message that the Prime Minister gave on that.
I think the data issue, having a really good picture
of what the weare the risk is and then you
can empower counsels to say, okay, we're all working off
the same data here, I can get the councilors can
(17:15):
get stuck into that, and then answering some of the
questions about who pays would be really useful too, because
I think you know, it's good, there's there's pleady of
good intentions out there, but stuff is going to have
to get built to make sure that we're reducing some
of the risk of primarily flooding and landslip on other
things as well.
Speaker 4 (17:31):
When when when it's weather hat so if we're giving.
Speaker 3 (17:34):
Clear leadership on that by the end of the year
by the government, then I think there would be good
a lot of momentum to start. There's plenty more to do,
but I think if we start biting this, taking this
as a chunk by chunk, then that's much better than
China ball all of the ocean.
Speaker 2 (17:48):
And just lastly, I've just thought of this, Chris, because
it's something that I'm sure that comes up with you
gout you all the time, our insurance.
Speaker 1 (17:55):
Evil and not want to ever pay out.
Speaker 3 (17:57):
Ever, Look, that's a public perception, and I think it's
around fair. I think if you look at what happened
certainly around Cyclo and Gabrielle and Augland anniversary weekend, we
had about ninety six percent of settlements done within eighteen months.
It's a vast improvement on some of the experiences that
understandably people might have been might have may been frustrated
(18:19):
with Kai.
Speaker 4 (18:20):
Kora and the Christ Shoots earthquake.
Speaker 3 (18:23):
I mean, we're there to make sure that people have
the peace of mind went when these things happen, that
we're there to support them. And I think overwhelmingly in
the last couple of years, three point eight billion dollars
gone into settlements to actual people and businesses can get
back up on their feet. I know that's a public perception,
but the numbers that I've just read it off, I
think are quite an impressive response to one of the biggest,
(18:46):
if not their biggest, climate related events that the country
has had. And the fact that we I to get
people back up on their feet so quickly. I think
it's test them to do a lot of hard work.
But as we were told at our conferences, yet it
was good. Could you do any better? Looking to improve?
Speaker 1 (19:01):
Thanks for joining us, Chris.
Speaker 4 (19:03):
Thank ee.
Speaker 2 (19:07):
That's it for this episode of The Front Page. You
can read more about today's stories and extensive news coverage
at enzedherld dot co dot nz. The Front Page is
produced by Ethan Sills and Richard Martin, who is also
our editor.
Speaker 1 (19:22):
I am Chelsea Daniels.
Speaker 2 (19:24):
Subscribe to The Front Page on iHeartRadio or wherever you
get your podcasts, and tune in on Monday for another
look behind the headlines.
Gielda.
Speaker 2 (00:05):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast.
Speaker 1 (00:10):
Presented by The New Zealand Herald.
Speaker 2 (00:16):
Could the government be taking a step back from helping
homeowners after the elements make their homes unlivable? Recent extreme
weather events have prompted a rethink of government housing protections.
Billions of dollars have been spent over the years on
buying out homes after natural disasters. But in a changing
(00:39):
world and climate where these events are happening harder and faster,
is the idea of the crown stepping in with unlimited
cash sustainable? Today on the Front Page, Insurance Council Chief
Executive Chris Farfoy joins us to explain what the future
looks like for homeowners.
Speaker 1 (01:04):
Chris, the government's.
Speaker 2 (01:05):
Historically stepped in after natural disasters to buy properties. This week,
Christopher Luxon has said that the government won't be able
to keep bailing out people in this way.
Speaker 1 (01:17):
Does this come as a surprise to you, that's.
Speaker 3 (01:20):
On the first time we've heard that from the government.
I think, regardless of which stripe, you are the appetite
for continuing the kind of buyouts and that we're seen
over the last decade and a half are starting to wane.
From our perspective, that's a government decision to make. But
also from the insurance perspective, if they're going to invest,
if they're going to spend tax payer money, then instead
(01:43):
of paying out after an event has happened, we'd prefer
that you spend that money to protect the communities and
that we're seeing being devastated by these kinds of events
on a relatively regular basis. Obviously, that can keep those
communities safer. But from an insurance perspective as well, it
just uses the risk and that's what our members used
the price, and if we can reduce that risk, we
(02:05):
can keep the insurance more accessible for keys.
Speaker 2 (02:08):
Yeah, if we're in a situation where the government does
pull the pen entirely on buyouts, where does that put
private insurers?
Speaker 3 (02:17):
And essentially in the same situation we continue to pay
out of people have got insurance policies. We did that
after Walking Anniversary and cyclone. Gabrielle that the difference here
is buyouts usually we have done the land or the
location of the incident is so bad, the risk is
so high, usually to the life that the local council
(02:40):
and the government agree that people shouldn't really live there anymore,
so people will still get an insurance pay out, but
the councilors and the central government also put their hands
in their pocket and say it's not possible for you
to live here anymore, and they get compensated through the buyout.
It almost makes insurance more important for people to make
sure that they've got it. Otherwise, if they're dying and
they're in this situation, I've got fewer options. But again,
(03:02):
if the government does go down this path and they
haven't made a decision, I've given some indications this week
around that, then the investment and making sure that communities
are safer because we know these kinds of things are
going to happen more often and have the ferocity of
what we've seen in the last couple of years and
in the last couple of months, then we really need
to make sure we're protecting those communities.
Speaker 2 (03:23):
Do you think we've actually learned any lessons from the
likes of Auckland and what's happened in Gisbon as well?
Speaker 4 (03:28):
Slightly?
Speaker 3 (03:28):
I think you've probably seen the issue around the Taka Bunagov.
Of course, in the last month where the open Councils says, well,
there is flooding risk in that community, to the families,
to the businesses, there's schools, there's rest homes there. So
actually something needs to be done to reduce the impacting
the impact of those kinds of events. So there's some
(03:51):
difficult decisions to be made. We'd agreed with the group
that put out the report last week, that independent reference
group that's given some advice the government that we needs emergency.
We're seeing these kinds of events happening more and more often.
You've seen this appetite four buyots start to wane from
the government. So something needs to happen in the middle
(04:13):
to make sure the communities are safe, that we can
protect from the impacts of the likes of flooding and landslips.
Speaker 4 (04:19):
And also again insurance.
Speaker 3 (04:21):
Is obviously quite important those situations for keepleus to fall
back on. You would have seen in the last twelve
to twenty four months after Gabrielle that people have had
along with everything else, that paying those insurance premiums can
be a challenge and in order to keep it manageable
in the long term, that kind of risk reduction, the
infrastructure getting put in place some difficult conversations, so we
(04:42):
can make sure that if things do happen, we're kind
of lowering the impact of whether those kinds of weather
events is really important to keep insurance accessible for the future.
Speaker 4 (04:53):
Yeah.
Speaker 5 (04:53):
Look, I know the report came out last week. It'll
take time for the government to digest. And you're right,
a lot of the proposals are around climate adaptation and
it's often for twenty years from now and I think
in principle, yes, you can't. The government won't be able
to keep bailing people out in this way.
Speaker 4 (05:07):
You know.
Speaker 5 (05:07):
That's why Simon Watts has worked quite hard to get
a bipartner as an approach with all the parties in
Parliament to say, look, there's going to be governments of
different colors and shoes going forward over the next couple
of generations. This is a long term issue. We need
a proper framework in place to work out whether it's landowners,
whether it's councils, whether it's central government, banks, insurers that
actually have to create a framework for dealing with these
sort of weather events and how we'll handle them going forward.
Speaker 2 (05:31):
When we think about and talk about shared responsibility, and
that's between central government local councils, banks, insurers and homeowners alike.
What could that mean in practice?
Speaker 3 (05:42):
I think you've got a lot of those parts of
the system keen to get ahead of this. I think
if you ask, most of these Islanders don't prefer that
we ate before these events a certainly from my perspective,
the insurance sector is keen to make sure that we
are reducing risk.
Speaker 4 (05:56):
That makes business sense for them, but also.
Speaker 3 (05:58):
For the communities that they cover, keeps some protective I think,
and there's a willingness for banks that we've been talking
to as a sector to get involved in their Certainly
councils I've been indeed earlier this week South of Leedin
is a long term issue and the councils want to
get their heads around this. What can we do, What
are the rules and the tools that central government might
give them. Where's the funding going to come from? None
(06:20):
of this is cheap and it's also very emotional. So
I think what we're looking for is some strong central
government leadership and I think we've seen some good signals
from the Prime Minister this week about what their thoughts
are around buyouts, what their thoughts are around building and
done places, and actually having to tackle this issue to
keep communities safe.
Speaker 4 (06:41):
In the future.
Speaker 3 (06:42):
So we're expecting some policy from the government by the
end of the year and some legislation in the House
to give us an idea of what those early rules
and tools for governments and the sectors that are part
of this, and we're really looking for some strong leadership
so we can kind of start tackling this. I mean,
from an insurance perspective, we want to make sure that
we are affordable to kiwis for the future. But if
(07:04):
nothing is done, if these things keep happening and we're
just status quo, then there's going to be some long
term challenges, not just for insurance, but for communities as well.
Speaker 2 (07:13):
I was thinking about because these climate events are going
to happen harder and faster, and we're going to see
more and more of them, and if the government or
if we don't start making those solutions before things actually happen,
then we then see a world where insurance is just
unaffordable for most kiwis and.
Speaker 3 (07:33):
The extremely with that's the challenge, and that's why we're
pushing so hard that we can do things beforehand to
try and reduce the risk as you say we're expecting
to be more often, we're expecting them to be more
ferocious than if you ask the people of now Stasman
experience of the last month in last that we're seeing
that we.
Speaker 4 (07:51):
Don't want to get into that situation.
Speaker 3 (07:52):
We prefer we've given the opportunity that banks, insurers, councils,
central government and communities can actually work together to get
some of these protections in place, because I think the
worst case scenario is that we don't do anything. These
things happen and you know, you've got asset values of
homes starting to diminish, you've got insurance being a challenge.
(08:13):
That's the fear. But we actually in about ten or
fifteen years time, I think if we can say that
some good decisions were made ten or fifteen years ago
to make sure you can get ahead of this, some
of the communities that are really at risk can continue
to survive and be strong. But I also want to
be really honest, there's some difficult conversations about some communities
(08:33):
have to have as well, and that's where that central
government leadership is really important.
Speaker 6 (08:37):
Because there we're built so many of towns and communities
in flood plains for historical reasons, but yeah, we will
likely have to move some of them. Figuring out how
to do that in a way that's as best for
the residents and for a sense of community and all
of those aspects. There's going to be as a massive
(08:58):
challenge for for local government central government and is a
big focus of a lot of social science research as well.
Speaker 2 (09:07):
Yeah, and are those difficult situations anything to do with
in moving entire towns.
Speaker 3 (09:13):
It could be, you know, in some councilors around the
country have been brave and started to ins towards those
conversations and have some of those conversations with the communities,
and as an insurance sector, we want to support them
because whether they are conversations that need to be had,
insurance might be an aspect of some of those decisions.
But that's where when I say rules and tools for
(09:35):
local government, I think there is a fear from local
government that if they start to make decisions which are
heading in a direction for some of those communities, if
it gets challenged or they kind of find themselves stuck
in long engagements where the communities then nothing will get done.
Speaker 4 (09:51):
And in some places, as it's been evidenced by the buyouts.
Some of these.
Speaker 3 (09:55):
Areas are you risk to life scenarios and keeping in
some of those places is not the wisest thing to
do long term. So instead of having an event to
get to that situation, there is an opportunity for us
to say, hey, look, let's have a good, mature look
at this.
Speaker 4 (10:11):
This is high risk. What do we do here?
Speaker 3 (10:13):
And certainly if counsels think that they're doing that on
the run, they're going to be They're going to find
out a challenge. So getting thanks, as you say, getting insurer,
is having rules and tools for counselors to be able
to have those conversations and being led by central government
giving them the tools to do that. And at some
stage who pays conversation has to come into this as well,
(10:34):
and we think is really.
Speaker 1 (10:35):
Important who does pay well?
Speaker 3 (10:37):
That's where that's the billion dollar question. And at the
end of the day, I think the government will end
up deciding that. The report that came out earlier this
month from the Independent Reference Group, which was advising the
government around well it should do in the adaptation and space,
basically said the beneficiari should pay now in some instances
(10:58):
that might be a community or an individual family or
a business and someone might be able to do that.
I think one of the promising science from that independent
reference group was in some instances, some communities won't be
able to pay, and they send a pretty clear indication
that in some instances central government might have to kind
of chip in and make sure they can protect communities.
(11:20):
So it's extremely complex. I think from an insurance perspective,
we want to see some urgency. We want to see
some clear leadership from central government. We've seen some good
indications of that week from the Prime Minister, and really
we just need to get on with it. There's been
a diagnosis of this issue. We know what's coming down.
The forecasters, the scientists are telling us that the weather
is going to get more extreme.
Speaker 4 (11:42):
People are starting to experience that.
Speaker 3 (11:44):
I'm the scientist, but I think people are kind of
understanding that things in terms of whether are getting much
more challenging. So getting together this is really important.
Speaker 2 (12:02):
When thinking about when the game really changed.
Speaker 1 (12:05):
I always think about the Canterbury earthquakes.
Speaker 2 (12:07):
Right at the time it was the fourth most expensive
ensured global natural disaster ever to happen. That's internationally, and
today it's cost private insurer is twenty one billion dollars.
Speaker 1 (12:21):
EQC paid a further ten billion.
Speaker 2 (12:24):
I mean, if that were to happen tomorrow, how would
we fare because private insurers especially, isn't that still being
kind of paid for?
Speaker 4 (12:34):
Oh?
Speaker 3 (12:34):
Un Thankfully we do have capital requirements, we do have
reinsurance arrangements. So in plain English, reinsurance is insurance that
insurers have. So if a big one line crist you
just to happen, as well as the money that they
have in their capital.
Speaker 4 (12:49):
Requirements, how they call on reinsurance.
Speaker 3 (12:52):
And again I think this is another if we're seen
by those international reinsurers to be taking action to reduce
the risk here in New Zealand for some of these
kind of weather related events stacy, that is a positive.
And we went to visit those re insurers with Climate
Change Minister Simon Watts last year. I mean they liked
the conversations that are happening and happening both our big
(13:15):
parties are talking about it.
Speaker 4 (13:16):
We're expecting some policy.
Speaker 3 (13:18):
We're actually in terms of the international situation, quite advanced
and looking at what we do to reduce risk. Now
as the time as I stay for the urgency, to
make sure we're getting on it so we can keep
those reinsurers happy.
Speaker 4 (13:29):
So if we keep those.
Speaker 3 (13:30):
Reinsurers happy, then their ability to pay out when the
big ones happened is maintained. And that did happen not
only in christ huge as you say, but that also
happened in twenty twenty three when Auckland Anniversary weekend and
cyclone Gabrielle happened. That was a three point eight billion
dollar event for private insurers alone, and the reinsurance got
(13:50):
caught on. But that was also a game changer. When
re insurers looked at New Zealand, traditionally they saw earthquakes,
and then twenty twenty three happened, and then climate related
events also became an issue. So we need to we
need to make sure that we're on top of those
kinds of events that of reinsurance will continue to have
confidence in us and be quite happy to re ensure
the resk that we've got here in New Zealand so
(14:12):
that our members our insurance can pay out when those
big things happen.
Speaker 1 (14:16):
Have you any idea where to start?
Speaker 2 (14:18):
I mean, I know these conversations are going to be
long and hard, but if you looked at, say someone
who lives on a house on a hill and you're
thinking coastal erosion, or is it a town on an
alpine fault, or is it a town in a valley,
Like where do you even begin to have these conversations
with these local communities and as a whole as well.
Speaker 3 (14:41):
That's a really good question because depending on where you are,
the risks are very different. According to Lloyd's where the
second risk is country in the world in terms of
natural hazard risk. So what I think everyone agrees on,
and I hope it's done out of some of the
work that the government's doing now, is we have a
really good national picture of war the risks are, and
(15:01):
the data is uniform across the board. A lot of
councils do have a good idea of what the risks
are in the area and they'll try and tackle that.
Some councils don't. Are smaller, they can't afford that kind
of thing. So what we're asking, and I think we're
getting some good indications for the government, is that we
have a platform that says here's New Zealand, here are
the biggest risks. So then we can all say, from
(15:22):
a central government perspective, how do we prioritize some investment
and risk reduction that the central government can get stuck into.
And also local councilors can say, like, here it is,
here's how much money we've got, and we can start prioritizing.
So I think you ask a good question. If we
try and board the ocean from the outset, we're going
to find out a real challenge.
Speaker 4 (15:41):
It's going to be really costly.
Speaker 3 (15:42):
But I think if we've got a really good understanding
across the board or the data around where those risks are,
if we start with that, then we've got a picture
that everyone can work off. And I think if councils
are given again the rules and how they can engage
and the tools to engage, I think you'll start seeing
local was getting really stuck in.
Speaker 7 (16:03):
My husband had to break down these palings off the
fence so that we could climb out through the back
fence and through the neighbor's property.
Speaker 1 (16:09):
All of her neighbors are in the same situation. The
house at the end of the streets bore the baruns
of us.
Speaker 4 (16:15):
I don't want this for anybody else.
Speaker 1 (16:22):
God it's way.
Speaker 7 (16:23):
It's quite upsetting because you feel like you're kind of
tricked into it because you think if the council gives
consent to build on a piece of land that that
piece of land would be safe.
Speaker 2 (16:36):
Chris, what would you like the government to do tomorrow?
Would it be something like bringing in a law saying
you can't build on flood prone areas or something as simple.
Speaker 1 (16:48):
As that, or I mean, what would you tackle first?
Speaker 3 (16:53):
I might take two or three of it's okay, still
certainly rooms for not building and dumb places. And I'm
heartened by the message that the Prime Minister gave on that.
I think the data issue, having a really good picture
of what the weare the risk is and then you
can empower counsels to say, okay, we're all working off
the same data here, I can get the councilors can
(17:15):
get stuck into that, and then answering some of the
questions about who pays would be really useful too, because
I think you know, it's good, there's there's pleady of
good intentions out there, but stuff is going to have
to get built to make sure that we're reducing some
of the risk of primarily flooding and landslip on other
things as well.
Speaker 4 (17:31):
When when when it's weather hat so if we're giving.
Speaker 3 (17:34):
Clear leadership on that by the end of the year
by the government, then I think there would be good
a lot of momentum to start. There's plenty more to do,
but I think if we start biting this, taking this
as a chunk by chunk, then that's much better than
China ball all of the ocean.
Speaker 2 (17:48):
And just lastly, I've just thought of this, Chris, because
it's something that I'm sure that comes up with you
gout you all the time, our insurance.
Speaker 1 (17:55):
Evil and not want to ever pay out.
Speaker 3 (17:57):
Ever, Look, that's a public perception, and I think it's
around fair. I think if you look at what happened
certainly around Cyclo and Gabrielle and Augland anniversary weekend, we
had about ninety six percent of settlements done within eighteen months.
It's a vast improvement on some of the experiences that
understandably people might have been might have may been frustrated
(18:19):
with Kai.
Speaker 4 (18:20):
Kora and the Christ Shoots earthquake.
Speaker 3 (18:23):
I mean, we're there to make sure that people have
the peace of mind went when these things happen, that
we're there to support them. And I think overwhelmingly in
the last couple of years, three point eight billion dollars
gone into settlements to actual people and businesses can get
back up on their feet. I know that's a public perception,
but the numbers that I've just read it off, I
think are quite an impressive response to one of the biggest,
(18:46):
if not their biggest, climate related events that the country
has had. And the fact that we I to get
people back up on their feet so quickly. I think
it's test them to do a lot of hard work.
But as we were told at our conferences, yet it
was good. Could you do any better? Looking to improve?
Speaker 1 (19:01):
Thanks for joining us, Chris.
Speaker 4 (19:03):
Thank ee.
Speaker 2 (19:07):
That's it for this episode of The Front Page. You
can read more about today's stories and extensive news coverage
at enzedherld dot co dot nz. The Front Page is
produced by Ethan Sills and Richard Martin, who is also
our editor.
Speaker 1 (19:22):
I am Chelsea Daniels.
Speaker 2 (19:24):
Subscribe to The Front Page on iHeartRadio or wherever you
get your podcasts, and tune in on Monday for another
look behind the headlines.
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