Property buyers should confirm flood cover says Insurance Council

1.00pm

People buying property should make their offers subject to flood insurance cover being available, as well as finance, says the Insurance Council of New Zealand.

While New Zealand companies have not yet removed cover from properties in flood-prone areas, the council's chief executive Chris Ryan warned that this could be a "real possibility" in future.

A string of major floods in New Zealand in the past five years has cost the insurance industry $300 million in damage claims.

Meanwhile, emergency managers and scientists are warning that climate change will cause more floods in the immediate future.

The insurance council is signalling this could lead to some places in New Zealand not being insurable in future because the flood risks are too great.

At the very least, companies could up premiums for property that flooded often.

"I'm not saying this would happen immediately. I'm saying it's a real possibility in the future," Mr Ryan said.

He would not be drawn on exactly where.

"Nobody is going to remove cover immediately. I'm not aware of any company that has done this in New Zealand, although it has happened in Australia

"But we can't stop the weather, so one of the messages we are going to have to look at is whether people should build and rebuild in flood-prone places."

Buying property was a case of "buyer beware" and potential purchasers had to look at more factors than just finance, Mr Ryan said.

Risks were not that hard to check. A title search would show if local authorities had tagged the land as flood prone when issuing the building consent.

This tag protects the local authority from responsibility if the building is subsequently damaged by flooding, slips, subsidence or other matters covered in the consent.

Mr Ryan said New Zealand needed a national strategy on flooding; a similar setup to the way earthquake damage was handled.

He wanted the insurance council to meet with central and local government and other agencies to sort out a national strategy.

"(In natural disaster terms) we've been very fortunate, as a nation, up until now," he said.

Local authorities needed to give flood risk more priority and ratepayers needed to accept that reducing the risk of flooding would cost them money.

Manawatu District Council's environmental manager Patrick McHardy said local authorities looked at the flooding history of a region, and other natural disaster histories, when deciding whether to tag a building consent.

"That's only a part of it, though. In Manawatu there are also flood channel zones, where you need consent from the council to build."

These areas were now under review and might be expanded in light of damage from recent flooding.

- NZPA