Reimagining Insurance in NZ — Risk-Sharing for a Climate-Challenged Era

A new book by Jonathan Boston, an Emeritus Professor of Public Policy at Te Herenga Waka—Victoria University of Wellington and who has published widely on public management, social policy, climate change policy, tertiary education and comparative government, proposes a mandatory public insurance levy to protect New Zealand homeowners from looming catastrophic events.

“We need to understand that New Zealand is a reasonably risky place to live and to own property. We have multiple geophysical risks, and we have increasing weather-related risks associated with climate change”.

“The second point is that the future is going to be radically different to the past, particularly in relation to weather-related risks. We are facing unprecedented risks over the coming decades and indeed, centuries. And unless we recognise that, we are not going to have policy frameworks that are fit for purpose and that can ensure we have enough economic and societal resilience,” he adds.

His book, “Insuring the Future, Reimagining Home Insurance in Aotearoa,” responds to the Independent Reference Group’s policy recommendation, which was established by the Ministry for the Environment (MfE) to develop a new climate adaptation framework for New Zealand.

The report from the Independent Reference Group recognised the high financial costs of climate change impacts and proposed a mature adaptation framework to manage climate change risks. This entails making risk-informed decisions early on, as further delays will only increase the costs for individual homeowners, the government, and insurers. The report presents three main recommendations:

• First, New Zealanders should receive information and warnings about natural hazard risks and their potential impacts. This includes guidance on adaptation, risk management, and financial implications. With this understanding, individuals can make informed plans to mitigate these risks.
• Second, funding for adaptation measures such as flood schemes, sea walls, and blue-green infrastructure should generally follow a ‘beneficiary pays’ approach. Those who benefit most from these investments should contribute more.
• Lastly, once informed of the risks, individuals should decide whether to remain in high-risk areas. Property values and ownership costs, including insurance premiums and mortgages, should reflect changing risk levels. While the government should support those facing hardship, property buyouts should not be expected.

According to Boston, the report tells New Zealanders, “You are on your own,” and views withdrawing property buy-outs, adaptation measures, and individual decision-making as “fundamentally flawed”.

In his book, Boston writes, “Given New Zealand’s distinctive natural hazards profile and numerous at-risk communities, small policy changes won’t be enough. A paradigm shift is required across risk governance, adaptation planning, and property insurance. We need vigorous risk avoidance, fair risk-sharing through reformed natural hazard insurance, and serious public investment in adaptation, including planned relocation where long-term protection is neither cost-effective nor feasible.”

As climate change risks increase, insurance premiums are rising, making coverage unaffordable for many, especially those in high-risk areas. To keep home insurance accessible and affordable as hazards intensify, Boston proposes spreading risk across all New Zealanders, rather than placing the burden solely on those in high-risk locations.

“It’s going to be weather-related hazards that are going to increasingly dominate people’s lives over the coming decades and beyond”, Boston states.

“So my argument in the book is that we need to expand the coverage of perils by the Natural Hazards Commission along the lines of what happens in many countries around the world so that it covers weather-related perils, particularly things like flooding of various kinds, windstorms, hailstorms, and so on”, he adds.

The system is like the ACC model or the Earthquake Commission (EQC); the latter was renamed the Natural Hazards Commission (NHC) in 2024 to reflect the agency’s role, which extends beyond earthquakes to cover a range of natural hazards, with risks shared across the population through levies and taxes.

Boston also pointed to insurance schemes in other countries that could point a way forward for New Zealand to cover protection gaps. For example, public insurance companies in Spain and France that provide cover for nearly all major natural perils.

“France and Spain, using slightly different approaches, have decided essentially that they will cover either fully the cost of natural disasters for insured properties, up to the insured value, or a very substantial part,” said Boston (Wood, 2025).

Watch the webinar discussing Jonathan Boston’s recent book.