Insurance Retreat in Residential Properties from Future Sea Level Rise in Aotearoa New Zealand

25 Pages Posted: 28 Oct 2022

See all articles by Belinda Storey

Belinda Storey

Climate Sigma; Climate Sigma

Christian Zammit

National Institute of Water and Atmospheric Research (NIWA)

Sally Owen

Victoria University of Wellington - School of Economics and Finance; Climate Sigma

Ilan Noy

Victoria University

Date Written: 2022

Abstract

How will the increased frequency of coastal inundation events induced by sea level rise impact residential insurance premiums, and when would insurance contracts be withdrawn? We model the contribution of localised sea level rise to the increased frequency of coastal inundation events. Examining four Aotearoa New Zealand cities, we combine historical tide-gauge extremes with geo-located property data to estimate the annual expected loss from this hazard, for each property, to establish when insurance retreat is likely to occur. We find that as sea level rise changes the frequency of inundation events, 99% of properties currently within 1% AEP coastal inundation zones can expect at least partial insurance retreat within a decade (associated with less than 10cm of sea level rise). Our modelling predicts that full insurance retreat is likely within 20 – 25 years, with timing dependent on the tidal range in each location, and, more intuitively, on the property’s elevation and distance from the coast.

Keywords: insurance, retreat, sea level rise, SLR, climate change

JEL Classification: Q540, R380

Suggested Citation

Storey, Belinda and Zammit, Christian and Owen, Sally and Noy, Ilan, Insurance Retreat in Residential Properties from Future Sea Level Rise in Aotearoa New Zealand (2022). CESifo Working Paper No. 10017, Available at SSRN: https://ssrn.com/abstract=4257216 or http://dx.doi.org/10.2139/ssrn.4257216

Belinda Storey (Contact Author)

Climate Sigma ( email )

19 Summit Apartments
184 Molesworth Street
Wellington
New Zealand

Climate Sigma ( email )

19 Summit Apartments
184 Molesworth Street
Wellington
New Zealand

Christian Zammit

National Institute of Water and Atmospheric Research (NIWA) ( email )

Gate 10 Silverdale Road
Hillcrest
Hamilton, 3216
New Zealand

Sally Owen

Victoria University of Wellington - School of Economics and Finance ( email )

PO Box 600
Wellington, 6140
New Zealand

Climate Sigma ( email )

19 Summit Apartments
184 Molesworth Street
Wellington
New Zealand

Ilan Noy

Victoria University ( email )

Footscray Park
PO Box 14428
Melbourne, 8001
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
151
Abstract Views
599
Rank
405,411
PlumX Metrics