Insurance Retreat in Residential Properties from Future Sea Level Rise in Aotearoa New Zealand

Storey, Belinda; Zammit, Christian; Owen, Sally

doi:10.2139/ssrn.4257216

Cited by 3 publications

(3 citation statements)

References 14 publications

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“…In A‐NZ, the state‐operated Earthquake Commission (EQC) insurance cover for rare, high‐impact hazards, does not include climate change induced flooding apart from damage to land or land‐supporting structures (Paster et al, 2018). Therefore, as climate change continues exacerbating the risk of flooding in most areas, insurance premiums, and/or policy excesses will increase and ultimately retail insurance will become unprofitable or unviable in many places leading to the retreat by private and/or public insurers (Lamond & Penning‐Rowsell, 2014; Raschky & Weck‐Hannemann, 2007; Siders, 2019; Storey et al, 2020). This is a particularly imperative issue in A‐NZ, because unlike many other countries that provide publicly subsided flood insurance (e.g., the United States, the United Kingdom, France), flood insurance on assets is only offered through the private sector, that is, changing practices on a company level.…”

Section: Discussionmentioning

confidence: 99%

Managing rising residual flood risk: A national survey of Aotearoa‐New Zealand

Fu,

Bell,

Reu Junqueira

et al. 2023

J Flood Risk Management

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Flooding is one of the most frequent and costliest natural hazards around the world. Traditionally, flood risk management has relied on building protective structures such as levees and dams to protect assets based on historical data (e.g., 1% AEP flood), which encourages development on floodplains, provides a potentially false sense of security to communities, particularly in the context of climate change, and increases residual flood risk (the risk remaining after implementing risk reduction measures). This article aims to contribute to the management of residual risk by drawing on empirical findings from a survey carried out with flood risk practitioners from the public and private sector in Aotearoa New Zealand. Findings indicate fundamental concerns relating to how to best manage residual flood risk, despite its long profile and integration in current policy and practice. Other issues revolve around the use of outdated information to guide decisions and the lack of regulatory power to restrict developments in flood‐prone areas protected by hard defense structures. Identified barriers to improving current practice include the lack of national guidance and support, financial resources, public awareness, and some technical constraints such as uncertainties in flood modeling, staff expertise, and data availability.

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Section: Discussionmentioning

confidence: 99%

Managing rising residual flood risk: A national survey of Aotearoa‐New Zealand

Fu,

Bell,

Reu Junqueira

et al. 2023

J Flood Risk Management

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“…In New Zealand there is also a suggestion that insurance withdrawal impacts house prices in exposed areas 3 , making ongoing infrastructure investment decisions harder to justify economically and therefore less likely [7]. Partial insurance withdrawal has been projected in New Zealand after 10 cm of RSLR (from 2022 levels; when the current '1 in a 100 year' event becomes a '1 in 20 year' event), with full insurance withdrawal from highly exposed coastal areas likely to occur in 20-25 years [63].…”

Section: Discussionmentioning

confidence: 99%

Simulating the Impacts of an Applied Dynamic Adaptive Pathways Plan Using an Agent-Based Model: A Tauranga City, New Zealand, Case Study

Allison

Stephens

Blackett

et al. 2023

JMSE

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Climate change and relative sea-level rise (RSLR) will increasingly expose coastal cities to coastal flooding, erosion, pluvial and fluvial flooding, episodic storm-tide flooding and eventually, permanent inundation. Tools are needed to support adaptive management approaches that allow society to adapt incrementally by making decisions now without creating path dependency and compromising decision-making options in the future. We developed an agent-based model that integrates climate-related physical hazard drivers and socio-economic drivers. We used it to explore how adaptive actions might be sequentially triggered within a low-elevation coastal city in New Zealand, in response to various climate change and socio-economic scenarios. We found that different adaptive actions are triggered at about the same RSLR level regardless of shared socio-economic pathway/representative concentration pathway scenario. The timing of actions within each pathway is dictated mainly by the rate of RSLR and the timing and severity of storm events. For the representative study site, the model suggests that the limits for soft and hard protection will occur around 30 cm RSLR, fully-pumped water systems are viable to around 35 cm RSLR and infrastructure upgrades and policy mechanisms are feasible until between 40 cm and 75 cm RSLR. After 75 cm RSLR, active retreat is the only remaining adaptation pathway.

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“…The term "full insurance retreat" refers to the point when insurers stop offering or renewing insurance policies because properties in that location face an escalating hazard (Storey 2017). Before that point is reached, a "partial insurance retreat" may occur whereby insurers begin to limit the extent to which homeowners are able to transfer the risk to the insurer.…”

Section: Introductionmentioning

confidence: 99%

Insurance retreat in residential properties from future sea level rise

Storey,

Owen,

Zammit

et al. 2023

Preprint

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How will the increased frequency of coastal inundation events induced by sea level rise impact residential insurance premiums, and when would insurance contracts be withdrawn? We model the contribution of localised sea level rise to the increased frequency of coastal inundation events. Examining four Aotearoa New Zealand cities, we combine historical tide-gauge extremes with geo-located property data to estimate the annual expected loss from this hazard, for each property, to establish when insurance retreat is likely to occur. We find that as sea level rise changes the frequency of inundation events, 99% of properties currently within 1% AEP coastal inundation zones can expect at least partial insurance retreat within a decade (associated with less than 10cm of sea level rise). Our modelling predicts that full insurance retreat is likely within 20 - 25 years, with timing dependent on the tidal range in each location, and, more intuitively, on the property’s elevation and distance from the coast.

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Insurance Retreat in Residential Properties from Future Sea Level Rise in Aotearoa New Zealand

Cited by 3 publications

References 14 publications

Managing rising residual flood risk: A national survey of Aotearoa‐New Zealand

Managing rising residual flood risk: A national survey of Aotearoa‐New Zealand

Simulating the Impacts of an Applied Dynamic Adaptive Pathways Plan Using an Agent-Based Model: A Tauranga City, New Zealand, Case Study

Insurance retreat in residential properties from future sea level rise

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