Watch Kali Mercier on Q+A discussing our report, Premiums Under Pressure

Helen Clark Foundation WSP Fellow and Deputy Director Kali Mercier was on Q+A on Sunday, discussing one of our latest reports, Premiums Under Pressure. You can watch the segment here.

Our report considers the issue of the ever-increasing home insurance premiums driven by climate change. Home insurance premiums in Aotearoa New Zealand have faced steep increases over the past few years. Premiums are expected to rise further over time as more insurers move to adopt ‘risk-based pricing’ for flood hazards and as the impacts of climate change increase, pushing up costs for insurance companies and their international underwriters. Without effective policy measures, these pressures will result in unaffordable premiums for some properties, leading households to reduce, or cancel, their insurance cover.

Key report recommendations include:

• Recognise the vital role of residential insurance in maintaining societal resilience in the context of increasing climate change-related risks.
• Avoid further developments in flood-risk areas that exceed agreed risk tolerances.
• Invest in climate risk mitigation and adaptation to keep residential insurance premiums accessible and affordable for longer. This must include setting out clear responsibilities and decision-making processes for how adaptation will be planned, funded and implemented at national and local levels.
• Agree a framework and a funding model for planned relocation for homes in risky areas where other types of intervention are not cost-effective or technically viable.
• Develop a public residential insurance scheme or schemes to fill current and future gaps in insurance caused by climate change, especially for flood risk.
• Consider other interventions in the residential insurance and financial markets to maintain high levels of insurance penetration, such as:Subsidising premiums for some homeowners.Standardising and simplifying insurance contracts.Agreeing on the level of transparency that is expected from insurance companies about how they make decisions affecting premiums prices.Monitoring and promoting competition in the insurance market.
• Subsidising premiums for some homeowners.
• Standardising and simplifying insurance contracts.
• Agreeing on the level of transparency that is expected from insurance companies about how they make decisions affecting premiums prices.
• Monitoring and promoting competition in the insurance market.

You can read the report here. A webinar that features report author Kali in discussion with experts over practical steps to address this issue is here.