House insurance review due after owners question Tower’s modelling

At a time when one-in-100-year storms are more frequent and some areas in New Zealand struggle to get home insurance, the owners of two Bream Bay homes got very different results when they complained to Tower about soaring house insurance premiums because they were being assessed as high risk of sea-surge flooding. Reporter Denise Piper investigates what happened.

One Tree Pt residents Kevin and Chris Burgess were relieved Tower agreed to reassess the sea‑surge risk on their property using more detailed modelling.

The NZX‑listed insurance company calculated earthquake and flood risk at an individual property level, rather than across broad zones, and last year expanded this approach to include sea‑surge and landslip risks.

But Kevin Burgess said when he saw his premiums were set to almost double to nearly $4000 a year because of high sea-surge risk, he knew there had been a mistake.

La Pointé Estate, where he and his partner built their home in 2012, was developed with stormwater detention lakes and a golf course designed to act as a floodplain.

At about 10m above sea level, estate residents used the steep steps leading up from the water as a way to get fit.

Burgess said if the house was subject to sea surge, then all of Whangārei CBD and Auckland CBD would be underwater.

“It’s on the [district and regional] council plans as flood-proof because that’s the way it was designed and built,” the retired architect said.

When he complained to Tower, he was contacted by its chief underwriting officer thanking him for highlighting the issue and agreeing to update the modelling.

Tower chief executive officer Paul Johnston said the LiDAR survey data used to assess the sea-surge risk at One Tree Pt had an elevation resolution of 25m, resulting in some properties being assigned lower elevations above sea level.

Kevin and Chris Burgess say their house at One Tree Pt is low risk of storm surge. Photo / Denise Piper

New 2m-resolution elevation data was now available and Tower had brought forward a model update to be completed by the end of next week.

“We anticipate this will lower sea surge risk ratings for some customers in the area.”

The Burgesses were told their premiums would remain until the modelling was redone.

Tower would also contact other potentially affected One Tree Point customers, including up to 10 due to renew their policies and fewer than 20 who already renewed – with the potential for refunds, Johnston said.

He maintained the modelling had been based on the best available data at the time and the issue was likely isolated to One Tree Pt.

That was cold comfort to Colleen Wesley, whose Tower premiums on her Ruakākā property were set to more than double, from $2300 to $4800 a year.

Kevin and Chris Burgess say their One Tree Point estate is well above sea level, with the steep steps down to the water often used as fitness training. Photo / Denise Piper

Although her property was close to Ruakākā River, Wesley said the house was elevated and mapping by the Northland Regional and Whangārei District Councils showed it would not be affected by a one‑in‑100‑year river flood.

“This land has been specially built up under council requirements.”

The house did not flood in Cyclone Gabrielle and this year’s storms, when the water reaching the bottom of the back fence, Wesley said.

She spent a month trying to explain this to Tower, working with its Fiji‑based call centre and sending photos and information, but the insurer would not budge.

Wesley said she ended up better off, as she was able to get a premium with Vero cheaper than she was previously paying with Tower.

But she believed Tower’s modelling needed looking at.

Tower chief executive officer Paul Johnston says conversations about risk and insurance are important in risk-prone New Zealand, with the company's modelling being transparent. Photo / Brett Phibbs photosport.nz

Tower stood by its assessment of Wesley’s property, saying it was lying low on Ruakākā River and highly susceptible to sea surge, as identified on Northland Regional Council’s maps, Johnston said.

“If a storm coincides with high tides, water levels can rise, and waterways can carry water many kilometres inland, causing flooding during a sea surge ... ”

Johnston said conversations about risk and the future accessibility and availability of insurance were critical for New Zealand, which he described as “one of the most natural hazard-prone countries in the world”.

Tower’s risk-based pricing sent clear signals about the risks associated with individual homes and allowed the company to offer more competitive premiums to lower‑risk properties, he said.

“Unlike blanket pauses or embargoes on entire towns, suburbs or regions, our approach ensures we continue to provide insurance nationwide,” he said.

Insurers, local councils and central government each measure risk differently and Tower continued to advocate for a centralised, nationwide natural hazard database, as a “single source of truth” for everyone, Johnston said.

“Tower is already actively contributing to this goal by sharing insights from our modelling with local and central government.”

Tower used some of the world’s leading risk‑modelling companies, including Netherlands company Haskoning for sea‑surge risk pricing, US-headquartered Moody’s for flood and earthquake risk, and Swiss RE for landslide risk.

The modelling also incorporated all publicly available data, mitigation measures and historic claims information, he said.

Denise Piper is a news reporter for the Northern Advocate, focusing on health and business. She has more than 20 years in journalism and is passionate about covering stories that make a difference.