The Trend Is Clear
New Zealand’s flood risk profile is changing. Heavier rainfall, increasingly concentrated into shorter periods, combined with urban intensification in flood-prone areas, is producing more frequent and more costly events. A survey conducted in connection with new Natural Hazards Commission research found that 67 percent of respondents believe natural hazard risk significantly affects their insurance premiums — and 25 percent said they lacked adequate information about hazard exposure when they purchased their property.
The Insurance Council of New Zealand, led by CEO Kris Faafoi, has called for coordinated government and community action: “Natural hazards and climate change are placing demands on insurance that require coordinated government and community action.” That coordination has not yet materialised at the scale the industry requires.
The Claims Integrity Problem
Rising flood frequency has also produced a secondary problem: opportunistic and fraudulent claims. The Insurance and Financial Services Ombudsman, Karen Stevens, used the occasion of the Natural Hazards Commission research announcement to warn policyholders that dishonest claims damage the entire system.
One case involved a policyholder who claimed 43 items were damaged in the 2023 Auckland floods. When assessed, only ten had actually been destroyed. The claim was denied, and the policy was cancelled. “Insurance relies on trust,” Stevens said. “Honesty is always the best policy.” Fraudulent claims increase costs for all policyholders and make it harder for insurers to remain in high-risk markets — which is precisely where the cover is most needed.
New Research Investment
The Natural Hazards Commission has funded 13 new research projects worth $1.2 million to address flood and earthquake resilience. The projects include examination of Auckland’s hidden geological fault systems, community-based disaster insurance models, and home retrofitting solutions for flood-resilience. The research programme is designed to improve the quality of information available to property owners, councils, and insurers making decisions about risk management and infrastructure investment.
What This Means for Builders and Property Owners
For those in the building and construction sector, the implications are practical. Properties in areas with documented flood risk are becoming harder to insure and more expensive to cover. Builders working on flood-prone sites should be familiar with the emerging guidance on flood-resistant construction — raised floor levels, flood-resistant materials, integrated stormwater management — as both a design consideration and a factor in property marketability. The insurance market is pricing flood risk more accurately than it was five years ago, and construction decisions made today will affect the insurability of the buildings being built.
