Insurer temporarily halts new policies in Westport due to flood risk
A major insurance provider has temporarily halted the issuance of new home insurance policies in Westport, New Zealand, due to the elevated risk of flooding in the area. The decision, made by AA Insurance, affects properties within the 7825 postcode, encompassing Westport, Carters Beach, and Cape Foulwind.
Insurance Coverage Changes
AA Insurance, which serves approximately half a million customers in New Zealand, informed Buller District Mayor Chris Russell of the change at the end of 2025. While new policies are paused, existing policies will remain in effect. A transfer policy is also in place to facilitate coverage for those buying or selling insured properties.
A Growing Trend?
Experts suggest this move by AA Insurance may not be isolated. Victoria University emeritus professor Jonathan Boston anticipates more insurers will retreat from high-risk areas as climate change intensifies. He advocates for greater transparency from insurance companies regarding areas where coverage is being reduced or made unaffordable.
Investment and Relocation
The decision from AA Insurance appears to be linked to a desire for increased investment in flood defenses. Belinda Storey, head of consultancy Climate Sigma, notes that the company’s parent organization, Suncorp, has employed similar tactics in Australia, withdrawing insurance until substantial flood protection measures are undertaken. However, Storey cautions that focusing solely on defenses could encourage further development in vulnerable areas, potentially increasing risk.
Local Efforts to Mitigate Risk
The Buller District Council has already endorsed a long-term plan that could eventually involve relocating Westport to higher ground. Current efforts, part of the ‘Resilient Westport’ project, include the construction of 17 kilometers of stopbanks, with sections already completed protecting over 30 homes. Further construction is planned to protect an additional 50 homes.
Funding and Adaptation
The national adaptation framework announced by Climate Change Minister Simon Watts includes provisions for funding and cost-sharing related to natural hazard events. While a $1.2 billion regional infrastructure fund exists, only $200 million is specifically allocated to reinforcing existing stopbanks. The framework currently lacks clear guidance on how costs will be distributed between central government, local councils, and homeowners.
Looking Ahead
If Westport’s flood risk is reduced, AA Insurance has indicated its intention to resume offering new policies. The West Coast Regional Council plans to update insurers – who are scheduled to visit the town at the end of February – on the progress of flood protection measures. It is possible that other insurers may follow suit and adjust their coverage offerings based on the evolving risk landscape. It is also possible that the council will continue to pursue relocation options as a long-term strategy.
Frequently Asked Questions
What areas are affected by this decision?
The pause on new policies applies to properties within the 7825 postcode, which includes Westport, Carters Beach, and Cape Foulwind.
Will existing policies be affected?
No, existing AA Insurance policies will remain in place.
What is the ‘Resilient Westport’ project?
The ‘Resilient Westport’ project is a long-term plan that could eventually involve relocating the town to higher ground, and currently includes the construction of 17 kilometers of stopbanks to mitigate flood risk.
As climate risks continue to evolve, how might communities balance the need for protection with the potential for managed retreat?