A major insurer that put a halt to new home insurance policies in Westport has also stopped issuing them in a second town, in North Canterbury.
AA Insurance says its decision to no longer issue policies in Woodend is due to reaching its maximum exposure to seismic risk – not a climate change-related hazard.
But a local real estate agent who discovered the change says Woodend is at lower risk from earthquake damage than many of the surrounding areas, and the decision is “baffling”.
The company confirmed to RNZ that it was not currently offering new home insurance policies in the township, which is about 25 kilometres north of Christchurch.
It stopped offering new policies in two other Canterbury postcodes for the same reason last September – Lincoln 7608 and Rolleston 7615.
AA Insurance head of underwriting Dee Naidu said limiting cover was “never something we do lightly”.
“These temporary restrictions are in place because AA Insurance has reached the maximum level of exposure to seismic risk we can responsibly take on in these areas.”
That exposure would naturally shift over time as customers moved, “so there will be periods where we are able to accept new policies, provided we remain within our exposure limit”.
Current policy-holders were not affected and would be able to renew their policies, and transfer them if they sold their home, Naidu said.
RNZ reported last week that AA Insurance had halted new home, business and landlord insurance policies in the West Coast town of Westport, due to the high flood risk the town faces.
In Westport, AA Insurance wrote to Buller District Council informing them of its decision, and would also meet with district and regional council staff later this month about flood protection scheme plans.
Naidu said the insurer was “committed to continuing engagement with local community leaders”.
However, a Waimakariri District Council spokesperson said the company had not informed the council of its change in approach in Woodend. The council had now contacted AA Insurance for further information.
‘It’s quite baffling’
Woodend real estate agent and resident Amanda Newson became aware of the insurer’s decision when a purchaser with an existing AA Insurance policy was told she could not get cover on a Woodend house she was buying.
AA Insurance told the buyer that was because of an “increased risk of a natural event happening”, Newson said.
To find out more, Newson attempted to get a quote for her own house and initially received the same response, with the company even referring her to the Natural Hazards Commission (NHC) for more detail about the nature of the “increased” risk.
NHC was “just as blindsided as I was”, she said.
“They went through all their latest updates around natural hazard risk that they have – they could find nothing that pinpointed any increased natural hazard risk for Woodend.”
Confused, Newson also looked at Land Information Memorandums for the properties and called Waimakariri District Council, but could not find any information about a change, she said.
An RNZ inspection of publicly available hazard maps confirmed the town had low flood risk, no tsunami risk, and a liquefaction risk that was unchanged since 2012. The township was also away from known or possible fault rupture zones.
“It’s quite baffling,” Newson said.
“If you look at Kaiapoi, Rangiora, and Woodend, Woodend had the least damage out of any of these areas in terms of the earthquake, We didn’t have any liquefaction issues here whereas pockets of Kaiapoi had huge issues with liquefaction, so I’m really stumped.”
Woodend real estate agent Amanda Newson
Photo: Supplied
When she went back to AA Insurance, another staffer told her that the company was overexposed to natural hazard risk and because of that, it would no longer insure certain areas.
“I understand from a business perspective if that’s a choice they’ve made and I don’t take issue with it,” Newson said.
“What I take issue with … is the information that they’re passing on is not accurate. There is no increased natural hazard event risk in Woodend, Canterbury – yet that is what they’re telling people.”
It was “quite scary as a property owner to hear that there’s an increased risk of a natural event, but no clarification about what that event is”.
Other major insurance companies were still providing cover in Woodend, but Newson was now upfront with purchasers about AA Insurance’s position.
“I will advise them, if you are with AA, they will not insure properties in this area. I explain my understanding of why that it is and … that I have seen no evidence or proof as to what this increased risk is.”
AA Insurance said it reviewed its restrictions regularly.
“Any future changes in our level of exposure to seismic risk in these areas will be reflected in the experience homeowners have when they come to us for cover.”
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