Sea level rise and the withdrawal of residential insurance in Aotearoa New Zealand.
- Author
- Storey, B., Owen, S., Noy, I. &; Zammit, C.
- Year
- 2020
- Journal / Source
- Climate Sigma for the Deep South National Science Challenge
- Publisher / Organisation
- Report for the Deep South National Science Challenge, December 2020.
- Month
- December
- Pages
- 17 pp
- Summary
- The homes of Aotearoa New Zealand hug the coast of our long thin islands tightly and this affects the pace of insurance retreat here. Climate change poses an increasing risk for these homes with current estimates projecting the sea level to rise by at least 10cm by 2040. Even a modest amount of sea level rise will raise the likelihood of a storm surge overtopping previous high-water marks and so flooding events that used to be rare are becoming more common. This will eventually lead to insurance retreat in certain areas. This report analyses on the change in frequency of coastal flood events over the next few decades. It explores how quickly sea level rise induced insurance retreat will affect coastal areas in Auckland, Wellington, Christchurch and Dunedin. Also, itestimates how expected sea level rise translates into higher insurance premiums. We analyse whether a 0.2% AEP (1 in 500 year) event in the Bay of Plenty is likely to trigger reinsurance contracts. The analysis in this report is conservative. We expect the true number of homes facing coastal insurance retreat to be higher, and the number on our inland floodplains to be far higher. Our results should be taken as a lower bound. This report summarises and accompanies two academic papers. The analysis shows that homes in Wellington and Christchurch which currently have a 1% probability of coastal inundation are expected to face a partial insurance retreat from 2030, with homes in similarly exposed locations in Auckland and Dunedin following only a few years later. In these four cities, full insurance retreat is likely to occur for at least 10,000 properties by 2050. A 0.2% AEP (1 in 500 year) event making landfall in Tauranga is unlikely to be expensive enough to trigger reinsurance contracts but highlights that Aotearoa New Zealand is still moving into and building in hazardous coastal locations. This rapid development is increasing our exposure to escalating hazards under climate change. A common response to increasing climate risk is to “harden the coasts” to defend property from inundation. However, engineering solutions like sea walls, stop banks and levees only delay damage at best and might even be counterproductive, as it encourages intensification in hazardous locations. Responses to sea level rise insurance retreat should attempt to eliminate the underlying risk by moving homes out of harm’s way.