While we may not have poisonous snakes and spiders in New Zealand, the risks of our natural surroundings are becoming harder to ignore, particularly for those charged with cleaning up the mess. Earthquakes, weather-related disasters, and the effects of climate change on our low-lying coastal properties mean that displacement from our homes and towns may become a more present reality in the future.

Residents in the small Bay of Plenty town of Matata are among the first to “lose the right to inhabit their property”, as the Regional Council mandates “a voluntary retreat” from the town under the auspices of the Resource Management Act. After a devastating 2005 flood the local council decided in 2007 it could mitigate the risk of similar destruction with a dam, but on further advice, they reversed that decision in 2012. Residents don’t want to be bought out, and plan to fight the decision in court. Matata’s situation will be an important test case for this use of the Resource Management Act, and councils across the country are watching with interest.

As our changing climate makes events like floods or landslips more common, we’re likely to see a whole lot of uncertainty for homeowners as insurance companies act to protect themselves against the risk…

Insurance companies are also watching, as their entire business is about insuring against, and managing risk. As our changing climate makes events like floods or landslips more common, we’re likely to see a whole lot of uncertainty for homeowners as insurance companies act to protect themselves against the risk, and become increasingly unlikely to provide cover for property in flood prone areas, on fault lines, or on reclaimed land.

We’re already seeing movement along these lines. Tower Insurance has recently announced that it will no longer offset the earthquake and reclaimed land risks in Wellington by charging Auckland policyholders more. Those in Wellington will have to cover their own risk, in some cases up to $1500 more.

Once a place becomes uninsurable, residents face a total loss situation.

History demonstrates that the costs of ignoring reality are high. Once a place becomes uninsurable, residents face a total loss situation. This occurred in Kelso in central Otago 1983 due to constant flooding. Eventually, the last remaining residents had little choice but to up and leave, literally moving their houses to safer ground.

So what can be done? Well if the risks are quantifiable, it might well be better to relocate before disaster strikes. However, this requires acknowledgement of the risks and for people to be prepared to invest in tomorrow, rather than fighting to remain where they are. Insurance companies have a role to play here, risk assessment is their bread and butter and their assessments need to be shared with people who are weighing up the costs and benefits of relocation.

The costs of relocation for those in disaster-prone areas will be high but if the alternative is worse, then perhaps an agreement can be reached that benefits both the people in harm’s way, and the insurance companies. We like to think of ourselves as a lucky country, but it will require more than luck to ensure New Zealanders remain insured against our country’s  geological and climate change risks.