Westport residents turn to brokers and specialists as mainstream insurers shut the door

Flooding in Westport in July 2021.
Photo: Supplied / NZ Defence Force

Westport locals are using brokers or specialist insurers as standard insurance in the flood-prone town becomes more difficult or expensive to get.

RNZ reported on Thursday that AA Insurance had temporarily stopped offering new home insurance policies in Westport because of the town’s flood risk.

However, Westport residents said that while AA Insurance was the only company to publicise its policy, many others were also refusing to take on new customers.

Life-time local Glenys Elley lives on a 10-acre lifestyle block on the outskirts of town, close to the Buller River but not in a flood area.

She was quoted nearly double her previous premium, after her broker was unable to secure a new policy for her in 2024.

“We had comprehensive insurance, we had total replacement. [In] 2023, we paid $4700 for our insurance,” she said.

“My broker rang and he said, ‘Glenys, I just can’t get any reasonable insurance for you.’ And I said, ‘Oh, really?’ And he said, ‘$8500.’

“And I said, ‘You are joking.'”

After calling insurers herself, Elley was able to get a quote from specialist rural insurer FMG, for a lower premium than her existing policy.

“I had a great experience with them, and they’ve been great.”

An aerial view of the eastern end of Westport during the July 2021 flood.
Photo: Supplied / Defence Force

Elley is not the only one – FMG was recommended by locals in Facebook community pages as among the few insurers still reliably offering new policies in Westport.

Jonathan Cleland, head of underwriting at FMG, told RNZ, “we have a limited risk-appetite within urban areas, given our focus on supporting rural and provincial areas”.

“For areas of heightened natural hazard, including flood risk, FMG takes a case-by-case approach considering individual client circumstances aligned with our underwriting risk-appetite.”

Taryn Sweyt and her partner ended up going through a broker to secure insurance for their first home, which they will move into next month.

The house – a 1950’s bach-style property – is at Carters Beach, a part of town the couple had always wanted to live in.

“Being able to hear the ocean all the time, being able to walk over to the beach and go for a swim, we know a lot of people who live at Carters Beach so you can wander round to each others’ houses easily.”

Carters Beach is low-lying and has had problems with erosion, but the house was on higher land, had not experienced flooding, and the vendors had an insurance policy, Sweyt said.

It was a surprise, therefore, when right before going unconditional they discovered that none of the major insurers would let them take out a policy.

“As soon as you put the postcode in, it says, ‘We’re no longer accepting insurance quotes’,” she said.

They even contacted the vendor’s insurer to see if they could transfer the policy, but were turned down.

“We thought, things have been kind of too good to be true, maybe this is the thing that makes it not happen.”

At their lawyer’s suggestion, they contacted a broker – a former cricket teammate of her partner’s – who was able to secure them insurance that afternoon.

Carters Beach is low-lying and has had problems with erosion.
Photo: RNZ / Rebekah Parsons-King

It had been “an interesting experience”, Sweyt said.

“The postcode is associated with flooding but where the property is, yes it’s near the beach, but a lot of places in New Zealand are, and it’s never had flooding before.”

Monitoring data published by Treasury in recent years has shown that insurers are starting to hone in on flood-risk areas, charging elevated premiums and removing some online availability.

Experts have warned that insurance will become prohibitively expensive or impossible to get at all for some properties as the risk from climate change-driven weather events continues to rise.

Westport has been repeatedly flooded over time, escalating in recent years. A 2021 flood left more than 100 homes uninhabitable.

Last March, Buller District Council endorsed a flood protection plan that includes opening up lower-risk land away from the existing town for development, building 17 kilometres of stopbanks and improving flood warning systems.

West Coast Regional Council chief executive Darryl Lew said on Thursday that two sections of stopbank had been completed.

But long-time Westport real estate agent Charlie Elley – Glenys Elley’s brother-in-law – said many residents felt there had been limited progress.

It was unsurprising that AA Insurance had decided to pause new policies, he said.

“I think the insurance companies have had to make this decision, and they have included in their statements that when things improve, they will reassess.”

Charlie Elley said problems with getting affordable insurance stretched back years, to when insurers started to use flood mapping.

“Even without floods, some of our premiums around town went up then, and that’s back in about 2005.”

The issue escalated after the 2021 flood, though.

“[Home buyers] tended to first up seek properties that weren’t affected. Then after that, and the rebuild of the houses that were affected took its course … people started to look at those properties, and then they started to get a few questions over their ability to get insurance.”

More recently, insurers seemed to be affected by “postcode insurance syndrome”, he said.

“It soon became obvious that there was a trend or a change … and now they’ve come out and announced it, [but] it was already being implemented.”

Nowadays, he often advised buyers to ask the seller for their insurance information so that they could request a policy transfer.

“We say it might cost you a little bit more, but it’s better than a total outright rejection.”

There had also been “a shift in loyalty” away from the traditional insurers to others with more leeway, he said.

“And we’ve now got an insurance broker in town offering to do what they can to get insurance for anybody. So, you know, where there’s a need, then there’s a market and somebody will probably meet it.”

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