Treasury to review financial and levy settings for natural hazards
Treasury to review financial and levy settings for natural hazards | Insurance Business New Zealand
Insurance News
Treasury to review financial and levy settings for natural hazards
How can the levy help homeowners?
Insurance News
By
Jonalyn Cueto
In a move towards bolstering New Zealand’s resilience against natural disasters, Associate Finance Minister David Seymour has requested that the Treasury review the financial and levy settings for natural hazards. This announcement comes in the wake of the Earthquake Commission’s (EQC) rebranding as the Natural Hazards Commission Toka Tū Ake, reflecting its expanded role under the new Natural Hazards Insurance Act effective from July 1.
The transformation aims to enhance preparedness and recovery capabilities not only for earthquakes but also for tsunamis, landslides, volcanic activity, and geothermal events. The Natural Hazards Commission, which has managed the country’s natural hazards insurance scheme for nearly 80 years, will now operate under updated legislation designed to clarify entitlements and streamline the claims process for homeowners.
Natural Hazards Commission chief executive Tina Mitchell said that the new act strengthens the commission’s mandate to mitigate the impacts of natural hazards across New Zealand.
“The new act reinforces and strengthens this role, and modernises our governing legislation to ensure we are better set up to meet the needs of homeowners now and in the future,” Mitchell said. Homeowners will benefit from simplified claims procedures and increased coverage for mixed-use buildings, such as apartments within commercial spaces.
Preparing for natural hazards
New Zealand’s vulnerability to natural hazards, including rising sea levels and severe weather events due to climate change, underscores the necessity for these improvements. Mitchell noted the timeliness of these updates, highlighting the increased frequency of extreme weather events linked to climate change.
In May, the government tasked the Finance and Expenditure Committee with determining how New Zealand will manage the risks and costs associated with future extreme weather events. A select committee inquiry into climate adaptation, supported by all parliamentary parties, aims to develop a framework for sharing the costs of climate change preparations.
The Natural Hazards Insurance Act integrates insights from the public inquiry into EQC and the experiences of Canterbury homeowners post-earthquake. Seymour said that the changes are informed by past events and feedback from claimants, emphasizing the government’s commitment to learning and improving processes.
In February, Seymour was appointed the minister responsible for EQC under the new National-Act-NZ First Coalition Government. Despite initial confusion about his role, Seymour has taken significant steps in his new position, including releasing the first Funding and Risk Management Statement (FRMS) for the Natural Hazards Commission. This document outlines the financial and levy settings and how the costs of claims will be managed between the Natural Hazard Fund and the Crown.
Seymour announced the Treasury review to ensure effective management and funding of claims arising from natural hazards. The review will assess the current and future financial positions of the fund and the overall financial stance of the Crown. Seymour said that the existing levy, collected by private insurers and managed by the Natural Hazards Commission, remains in place and is backed by a government funding guarantee, providing certainty to claimants.
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