Insurers want RMA replacement to prevent people building in ‘dumb places’

The Insurance Council wants the Government to disincentivise building in bad places. Photo / FIle

• The Government is planning to repeal the RMA and replace it with two new laws, which focus on property rights.
• The Insurance Council wants the Government to ensure the new regime discourages people from building in uninsurable places.
• The Government has promised a new National Direction that might achieve this.

Insurers want to make sure the Government’s replacement for the Resource Management Act (RMA) ensures people avoid “building in dumb places”.

Our, shaky, weather-beaten islands are no paradise for insurers who are nervous about exposure to risks posed by earthquakes and climate change-induced storms such as Cyclone Gabrielle.

The Government plans to replace the RMA with two new pieces of legislation, which put private property rights at the core of the resource management regime (although just how they will do this is currently unclear). In general, the Government is trying to establish a permissive, pro-development regime.

Insurance Council chief executive Kris Faafoi warned if the new regime meant allowing “development in high-risk locations” it would risk “putting people in harm’s way” and ultimately lead to worse outcomes for Kiwis.

He said New Zealand was “particularly vulnerable to natural hazards risks”, with the Climate Change Commission’s warning “around 750,000 people and 461,000 buildings are at risk of coastal inundation or inland flooding, involving many billions of dollars in assets”.

The council wants the Government to provide some concrete direction on rules around developing in hazardous areas through “a National Direction for natural hazards” and to “provide the ability to decline land use consents, or attach conditions, where there are significant risks from natural hazards”.

The Government is committed both to the National Direction and giving councils the ability to “decline land use consents, or attach conditions, where there are significant risks of natural hazards”.

RMA Reform Minister Chris Bishop told the Herald that while local government was currently required to manage significant risk from natural hazards such as floods and landslides, “currently, these functions are handled differently across the country”.

He said the “new National Direction for Natural Hazards was expected to provide consistent direction to councils on how to identify natural hazards, assess the risks, and respond through their planning and consenting”.

“The objectives to reduce the risk from natural hazards faced by homeowners is not necessarily in tension with objectives around property rights and unlocking developable land, but recognises that both are required to achieve better outcomes as our towns and cities grow.”

Faafoi wanted the National Direction to “provide consistency in identifying and managing natural hazards and help ensure we build in the right places”.

“This in turn will strengthen the country’s economic and community resilience and provide certainty to homeowners and businesses that insurance will be there when they need it,” he said.

Faafoi said New Zealand “needs to take a long-term perspective that fosters the broad availability of insurance”.

“This entails prudent land-use planning that avoids new developments in high-risk areas susceptible to natural hazards.

“Where the risk becomes too high, insurance may not be affordable or available, which has an impact on property values and the housing market and puts pressure on the Government to invest in protection or compensate owners.”

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.