New Zealanders may not have enough information about how risky their homes really are, one insurer says.
Suncorp New Zealand chief executive Jimmy Higgins said it needed to be made easier for people to access natural hazards information when they were considering buying a house.
Research by Suncorp showed only 57 percent of people considered natural hazard information when they purchased their most recent home.
“We want checking natural hazard risk to be as routine as researching the school zone, commute or building report.
“Too many homeowners are relying on proxy information like local knowledge or insurance prices or not clearly understanding the data they do use.”
The research showed that while 59 percent of people surveyed said they turned to official council data for information on natural hazards, family, friends, and local knowledge were the next most common sources of information, at 27 percent.
When asked what stopped people from seeking natural hazard information, more than a quarter said they did not know where to find the information, while 20 percent said they didn’t know what information was available.
Higgins said there was a disparate range of information available in different places that should be consolidated into one area and simplified so that homeowners could understand and access their information.
Suncorp has proposed establishing a single, central “all-hazards” property portal, introducing national plain-English standards for hazard terminology and bringing insurance and hazard checks earlier into the home-buying process.
At the moment, the Natural Hazards Portal links to information from councils but each presents it in a different way.
There have been concerns that growing natural hazard risks, due to climate change, are making it harder or more expensive to insure properties in some parts of the country.
A report by the Helen Clark Foundation estimated 10,000 properties in Auckland, Wellington, Christchurch and Dunedin could be uninsurable by 2050.
“Understanding of natural hazard risk is different across the various sections of the economy, whether you’re a developer, whether you’re a government or a council or an insurer. The definition of an understanding of natural hazard risk is different,” Higgins said.
“What we’re saying is we need to have simplified approach to understanding natural hazard risk and also an easy ability for homeowners to access that information through what we would define as a central portal.”
Kelvin Davidson, chief property economist at Cotality, said it kept flood risk scores on its database.
“There are higher flood risks in areas like West Coast, Napier, parts of Southland that are around rivers. The markets that we’re seeing as high risk are smaller, though … Even though the West Coast is riskier than, say, Christchurch, Christchurch is bigger.”
He said data indicated that when there was an event such as Cyclone Gabrielle, properties that were affected or seen to be at risk fell in price.
“But what we’ve seen over the past two, three years is that actually those properties, yep, there’s a price discount, but over the subsequent sort of two or three years, they’ve actually grown a little bit faster than unaffected properties, which was a little bit of a surprise.
“But I guess what it shows is that for the moment, people are seeing the discount and going, ‘great, it’s affordable, it’s cheaper, I’m okay with the risk, I’ll buy it’.
“That’s all well and good right now because you can probably still get insurance, it’s probably still reasonably affordable. But whether people are fully going in with eyes wide open with the knowledge that … in five years or 10 years if there’s another event, insurance premiums keep going up, at some point, premiums may be unaffordable. And therefore, there might be some people who stop their insurance, then they’re in breach of their mortgage contract. That property might not be sellable at some point in the future.”
He said awareness was growing but many people were not considering the full risk while insurance was still available.
Davidson said natural hazard risk could become the main issue for the housing market in the future.
“It’s not hard to imagine at all that over the next 10, 20 or 30 years, actually coastal retreat, climate change, insurance cost provision becomes the biggest issue. It could take over from affordability and climate change could become the biggie. You don’t even have to live near the sea. Surface flooding can be a big danger living near rivers, lakes. I think it’s going to become a bigger issue and hopefully the awareness gets bigger as well and people really start to factor that into their decisions.
“Because in the end it’s probably going to be the individual homeowner who carries the can if something goes wrong.”
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