Public Insurance and Climate Change (Part One): Past Trends in Weather-Related Insurance in New Zealand

34 Pages Posted: 8 Nov 2019

See all articles by David Fleming

David Fleming

Motu Economic and Public Policy Research Trust

Ilan Noy

Victoria University of Wellington

Jacob Pástor-Paz

Victoria University of Wellington

Sally Owen

Motu Economic and Public Policy Research Trust

Date Written: July 1, 2018

Abstract

Climate change appears to be increasing the frequency and magnitude of extreme weather events, negatively affecting communities as well as posing long-term sustainability challenges to insurance (risk transfer) mechanisms. New Zealand’s public natural hazard insurer, the Earthquake Commission (EQC), covers homeowners for damage to land (and in some cases to dwellings and contents) caused by landslip, storm or flood. We comprehensively explore the EQC claims data to investigate these weather-related claims from 2000-2017. We find no clear upward trend yet emerging in the number of claims or their value. We find that the northern regions of both islands are the source of most claims, that only a handful of weather events caused a large proportion of EQC’s weather-related pay-outs, that the average property lodging a weather-related claim is located twice as close to the coast as the national average, and that properties with claims usually are cited on much steeper land than the typical property in New Zealand. We also explore their relation between claims and socio-economic characteristics, finding that higher income neighbourhoods appear to be those most benefiting from the EQC coverage for weather events.

Keywords: climate change, extreme weather, natural hazards, public insurance, New Zealand

JEL Classification: G22, G28, Q51, Q54, Q58, R28

Suggested Citation

Fleming, David and Noy, Ilan and Pástor-Paz, Jacob and Owen, Sally, Public Insurance and Climate Change (Part One): Past Trends in Weather-Related Insurance in New Zealand (July 1, 2018). Available at SSRN: https://ssrn.com/abstract=3477038

David Fleming (Contact Author)

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

Ilan Noy

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Jacob Pástor-Paz

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Sally Owen

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

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