ICNZ chief reacts to gov't buyout plans for flood-prone homes

ICNZ chief reacts to gov’t buyout plans for flood-prone homes | Insurance Business New Zealand

Catastrophe & Flood

ICNZ chief reacts to gov’t buyout plans for flood-prone homes

“If there’s a silver lining to the dark clouds of these extreme weather events, it is that there’s a concerted focus on reducing risk in high-risk areas”

Catastrophe & Flood

By
Kenneth Araullo

“If there’s a silver lining to the dark clouds of these extreme weather events, it is that there’s a concerted focus on reducing risk in high-risk areas, and we welcome that,” Grafton said.

In an interview with RNZ, Grafton said that it did not matter which category properties were put into, as their entitlements under the policies remained up to the sum insured. However, he said that these categories would have some bearing on whether the properties would be insurable in the future.

Clarifying further, he said that it was “highly unlikely” that insurance would be available in the future for residential property under the most flood-prone group, which is category three. Category two, on the other hand, still holds “a fair bit of uncertainty” in that regard.

“Insurers will look at the mitigation measures that are occurring and that will inform their view of risk – each one has their own appetite for risk – and so terms and conditions could be applied around the insurance for properties in category two,” he said.

While he said that it is still unknown how much the buyout offers would be, he said that the government did not “want to create a situation where offers are so generous that it negates the need to insure your property.” Either way, Grafton had recommendations for category two and three property owners who will receive a cash settlement should the buyout plan push through.

“Look after that cash settlement in order to help you on the path to recovery when you’re clearer about the way ahead for yourself,” he urged.

Last week, Robertson and associate finance minister Michael Wood said that the government is entering a co-funding arrangement with councils for the buyout plan, including help on paying for repairs on properties with manageable risk. This follows the earlier assessments on properties affected by the extreme weather events that hit the country earlier this year.

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