Insurers 'need a greater say'

Insurers want more say about where and how we build our homes and businesses as they confront the spectre of rising bills from natural catastrophes and climate change.

"We need to have a much greater say in where buildings are built and how they are built," Insurance Council of Australia head Robert Whelan told an industry conference yesterday.

Local industry leaders agreed, saying insurers needed to work better with Governments and homeowners.

"We sell promises that we will be there to pick up the pieces," Whelan said. "I'm arguing that I think we should have a say in where those pieces are put in the first instance."

Investment Savings and Insurance Association head Peter Neilson said it was inevitable that the New Zealand industry would want to play a bigger role in disaster and community planning as a result of reviews of the Christchurch earthquakes and Australian floods.

"Regardless of what the cause is, you're at the front end as problems occur," he said.

Sovereign chief executive Charles Anderson said insurers had a positive role to play in helping people reduce and cover risk.

"If you put all your assets into your house and it falls down and you can't rebuild it you've lost all your lifetime of wealth, so you do need to be able to have a partner in that risk, " he said.

"You can't as a society expect to build in completely inhospitable or uninhabitable parts of the country and expect the same insurance treatment as you would somewhere else."

Insurers gathered in Auckland to debate a set of draft principles for sustainable insurance that the United Nations Environment Programme hopes to put before the UN sustainable development conference next year.

Feedback on the UN principles will be gathered globally before a final draft is prepared for companies to sign up to.

The industry is discussing ways to tackle thorny matters such as extending cover to risky and underinsured groups, and how to price and reduce risks from issues such as climate change, biodiversity loss and ageing populations.

Whelan said a run of natural disasters in Australia had exposed poor planning there and wiped half a per cent off Australia's first quarter GDP – and the issues were similar in New Zealand.

The areas of Queensland worst hit by recent flooding had experienced enormous growth in the past 30 years, he said.

"Regrettably most of that growth happened to be on a floodplain. We see governments at all levels seeking to develop their state or their country and allowing more and more assets and people to be put in areas at risk.

"That is what occurred in Australia and we reaped the consequences of that."

Anderson said risk management did not rule out building in all risky areas, such as those prone to flooding. "It might be that you improve the building code, and every building needs to have a basement with a pump, and you build four feet above the ground."

On the coast, the best natural defences against tsunami damage were mangroves, which people had pulled out to build beach houses.

"So you can imagine that in that scenario you need to involve all sorts of agencies to see that there is a better solution."