Case Studies on Insurance and Compensation after Natural Disasters

Abstract

This paper is part of a Deep South National Science Challenge project on insurance and other liability for compensation for damages suffered to housing from coastal hazards associated with sea-level rise. There are a range of issues addressed in this project, presently divided into different discussion papers. This paper considers some examples of where financial risks to property have fallen both in New Zealand and overseas as a result of some natural disasters, particularly flooding. Pre-existing schemes are important for discussing possible future policy responses as they are and how they could be adapted for new and different natural hazards. This paper examines ways that risk, damage, cost and liability currently fall under different schemes. Private insurance, state supported insurance, the Public Works Act 1981, and council liability could be used to share losses of value and utility of land. Each of them has weaknesses; however, these can be used, adapted, and/or combined to create a framework to deal with loss of value and utility of land due to sea-level rise. If any government subsidy scheme is adopted, it will need to avoid the problems of previous compensation schemes here and overseas, and be carefully designed to enable people to assess and manage the risks to their homes and communities fairly. What is fair won’t be determined by analysis of what is currently legal, but needs to be the subject of a wider discussion.