The insurance sector is calling for a major overhaul of how New Zealand funds emergency response and natural hazard resilience, proposing a new Community Protection Levy to replace the current Fire and Emergency New Zealand levy.
Insurance Council of New Zealand Chief Executive Kris Faafoi says the existing FENZ levy system is too complex and no longer fit for the scale of natural hazard risks facing Aotearoa.
Under the proposal, FENZ would move to sustainable Crown funding, while the money currently raised through insurance-linked levies would be redirected into long-term resilience and risk reduction projects.
ICNZ says the change could free up around $600 to $700 million a year to help communities reduce the impact of floods, storms, fires and other natural disasters before they occur.
The proposed Community Protection Levy would still be collected by insurers on behalf of the Government, but would replace the current system of different charges across homes, contents, commercial property and vehicles.
The insurance sector says the new approach would be simpler for households and businesses, while giving communities a clearer stake in reducing the risks they face.
ICNZ says public support for early action is strong, with its research showing 87 percent of respondents support acting before disasters strike to protect communities.
Faafoi says recent projects show the value of prevention, including the Taradale stopbank, which helped protect communities during Cyclone Gabrielle, and the Awanui Flood Protection Scheme in Kaitāia, which is estimated to have already avoided around $50 million in damage.
The council says local authorities are being asked to lead climate adaptation and resilience work, but need reliable and long-term funding to do the job properly.
It is also calling for Budget rules to recognise resilience spending as an invest-to-save measure, arguing New Zealand cannot continue spending heavily on disaster recovery while underinvesting in prevention.
The proposal comes as the Government develops its National Climate Adaptation Framework, with insurers urging political parties to back stronger and more consistent investment in protecting communities before the next disaster hits.
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