Climate change and the withdrawal of insurance in New Zealand

Slow and sudden onset thresholds for private insurance retreat under climate change in New Zealand

Coastal hazards are escalating with climate change. In particular, coastal homeowners can expect both sea level rise and more frequent and intense coastal storms. However, we see continue to see demand for housing through new coastal residential development and intensification of existing urban areas on the coast. This suggests that climate change related escalating coastal hazards are not yet fully reflected in home-owners decisions to purchase and renovate coastal property.

Consequently, climate risk may not currently be incorporated into the price of residential coastal property.

Evidence from overseas suggests that high insurance premiums and the unavailability of insurance has a stronger impact on private decision making than the uncertain risk of extreme events. Drawing on this, this project will explore how coastal housing markets impacted by climate change may respond to “insurance retreat” – if insurance becomes unavailable.

The project will identify those locations most likely to lose access to insurance within the next few decades (as the probability of extreme events increases).

The project will also estimate the direct economic losses on residential property of an extreme coastal storm making landfall in Tauranga City, to determine whether this size event could trigger reinsurance retreat (the withdrawal of the international insurers, who insure our local insurance companies) from other coastal locations in New Zealand.

Principal investigator:
Belinda Storey

Project budget: $110,000
Project duration: 


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