Hawke’s Bay flood victims struggle to get insured post-cyclone

Re-building plans in the Hawke’s Bay are being held up as locals struggle to find insurance cover after Cyclone Gabrielle.

Some weren’t able to find any cover at all, while others were quoted much-higher premiums.

New Zealand insurance brokers have issued a warning, citing “gone are the days of DIY insurance”.

The surge in premiums was leaving residents grappling with the financial burden, and insurance brokers are emphasising the need for strategic decisions to mitigate risks.

Paul Atkins from Pakowhai is one of those hit by insurance woes, highlighting the difficulty in finding affordable coverage.

Atkins said he was now paying an 82% increase in premiums, amounting to an additional $4000 annually. Despite seeking alternatives through a broker, he found no other takers, forcing him into accepting the steep premium hike.

Insurance Brokers Association of New Zealand Mel Gorham acknowledged the significant post-cyclone increase in premiums and stressed there was no one-size-fits-all solution.

The situation varied based on insurers’ experience with specific areas, resulting in unprecedented hikes that many residents found challenging.

“Everything we are seeing at the moment is looking like it’s only going to be harder to purchase insurance and do it yourself,” Gorham said.

“[It is] definitely a changing landscape. Insurers are becoming more aware of the particular dangers and exposures since last year, it will be more difficult for clients to find their own solutions,” Gorham said.

Pakowhai resident Troy Duncan recounted the challenges he and his family faced after their previous insurer, Tower, chose not to renew their policy post-cyclone.

Despite 24 years of loyalty, Duncan struggled to find a new provider among five different options and insurance brokers. His situation reflected a growing trend of insurers hesitant to cover Hawke’s Bay properties.

In response, Tower Insurance stated it insured only completed dwellings or small renovations, assessing risks individually and potentially discontinuing coverage for high-risk properties.

“For all our policies, including for homes impacted by land categorisations, we assess risk on a case-by-case basis. One thing we look at is flood risk. Our model responds to historical and real-time events, its approach is specific to individual addresses, as opposed to large or blanket areas. We care deeply about our customers and where possible will find a solution to continue cover however, if a property has a high flood risk, we may decide to no longer offer cover”.

Residents such as Duncan find themselves in limbo as the Hawke’s Bay Regional Council estimates that flood protection work may take up to four years.

The Insurance Council of New Zealand highlighted the importance of communication between insurers and policyholders, urging affected individuals to shop around for the best deals.

“Insurers want to keep on providing insurance to their customers but if people are in strife and can’t afford it, talk to their insurer but also shop around for the best deal you can get,” Insurance Council of NZ insurance Tim Grafton said.

However, residents argued that the suggested solutions were insufficient, with many expressing frustrations at the lack of viable options.

As New Zealand residents continued to grapple with rising premiums and limited insurance options in the aftermath of Cyclone Gabrielle, the evolving landscape prompts concerns about the accessibility of insurance in flood-prone areas — with many residents caught in a bureaucratic crossfire.