Rising sea levels and more extreme weather will change the way property is insured, but one expert warns higher premiums are just the start.
Climate change is set to intensify and increase the major weather events people insure properties and assets against - protection some homeowners may struggle to obtain in future.
It comes as flash flooding hit Rotorua and the wider Bay of Plenty last Monday, inundating homes and causing rising rivers and streams to threaten properties.
It's the type of weather event Victoria University climate change risk researcher Belinda Storey expects to become more frequent - though said it was too soon to say if that specific incident was linked to climate change.
Storey is also the director for Climate Sigma, which models and analyses climate change scenarios and provides asset valuations.
She said homes in major New Zealand cities would start to become uninsurable within the next 10 to 15 years.
Insurance withdrawal could start happening sooner than expected given the latest information on sea level rise released in May. This was especially true where land was sinking.
The NZ SeaRise Programme data showed Bay of Plenty areas such as Tōrere, Matatā and Katikati were among those sinking.
While there was a margin for error in the data, one point of Matatā's coast was estimated to be sinking 2-3mm a year. With moderate emissions, the sea level was on a trajectory for a 20cm rise from 2005 to between 2025 and 2040.
Storey said a key issue for the Bay of Plenty would be the impact of more frequent big storms like 1968's ex-tropical cyclone Giselle.
The storm drove waves inland, flooding coastal farmland, while inland areas such as Rotorua had flooding from heavy rain, according to Niwa records.
Hundreds of cattle and sheep drowned in the seven-day event, homes were flooded, schools demolished, power cut and people hurt. Insurance payouts, adjusted for inflation, totalled almost $70m nationwide.
West Coast flooding last year cost $97.2m, and the Timaru hail storm in 2019 cost $170.98m.
Storey said the sea level had risen since Giselle and yet there was still development in impacted floodplains.
"Significant parts" of Tauranga, for example, were in areas with a 1 per cent probability of flooding every year, and further development was in places with a 2 per cent risk.
"That is quite high, it is already at the point where insurers start to withdraw."
Insurance premiums would go up as the probability of damage increased. A 10-15cm rise could lift the 1 per cent probability to 5 per cent.
On a $1m home insured to cover 30 per cent of the damage, that rise could lift premiums from $3000 a year to $15,000 for flooding hazards alone.
"If [insurers] think when they start charging $15,000 premiums they are likely to get a backlash we can expect insurers will simply start to decline insurance."
She said the New Zealand insurance market differed from other countries in that it tended to be all perils cover.
"One of the things we anticipate will happen with climate change is you will get an unbundling of that, which means insurers will start to restrict what things they cover."
But those were things homeowners need insurance to cover the most.
Rod Meharry lives in Matatā, the town that has for the last decade gone through a managed retreat from its coast.
He believed insurers would begin to withdraw soon, and that some already had; friends in nearby flood-prone Edgecumbe struggled to find an insurance company.
"Very few" houses were left on low land in Matatā since Whakatāne District Council's attempt to mitigate the risk of another debris flow like in 2005 failed and it re-zoned the land.
Meharry, the local residents association chairman, said the town was the first in the country to experience such a retreat, and it would be a precedent for others.
He said it was time to have the conversation: "Is it buyer beware?"
Damage from extreme weather events was happening more and more, and insurance premiums would reflect that, he said.
When that happened, Meharry said people also would choose to not insure.
Insurance Council of New Zealand chief executive Tim Grafton said the impact of climate change had been growing steadily for a long time.
Regarding how climate change would impact insurance, he said things would likely stay the same short term.
The longer-term would depend on what communities did to build resilience to risks.
"Some communities really do have to act now if they are to remain safe from harm in around 10 years' time."
He was not aware of any areas of the country that could not get insurance now for climate change reasons.
In recently flooded places such as Westport, insurance was still available through existing providers or by shopping around.
"As you would expect, insurers do review risks when there have been major events. When thinking about rising climate risks over the medium to long term, this is why we say, as a sector, that investing in reducing risk at a community level is so important."
Places where sinking land coupled with sea level rise meant key thresholds could be crossed by about 2040, Grafton said.
Sea level rise on its own was not insurable as it was not sudden or unforeseen.
What was covered were events such as storm surges and floods, both of which were amplified by sea level rise.
"One rule of thumb is to look at any area that's at risk from extreme weather impacts today to see where things will get worse first unless action is taken to reduce risks."
He said the Reserve Bank of NZ was looking at climate risks through the lens of the security of the financial system.
A Reserve Bank spokesperson said licensed insurers in New Zealand were regulated via a twin peaks model; the Reserve Bank - Te Pūtea Matua was responsible for licensing and prudential supervision and the Financial Markets Authority covered conduct supervision.
Last month it released the latest biannual Financial Stability Report, which noted that climate change presented long-term risks and opportunities to financial institutions.
Two particularly relevant findings were that insurers relied on reinsurance arrangements for storms and other perils, and disruptions to these arrangements would create challenges for the insurance market.
As well, droughts on their own may not cause undue stress to the banking sector, but when combined with an economic downturn the number of defaults could be significant.
Rotorua Lakes Council environmental and infrastructure solutions deputy chief executive Stavros Michael said adapting to and mitigating climate change impacts was a priority and the council's Climate Action Plan provided a blueprint for doing this.
It included actions relating to the delivery of key infrastructure when upgrading or building new with a focus on strengthening climate change resilience.
Bay of Plenty Regional Council integrated catchments general manager Chris Ingle said urban areas most likely to be impacted by rising sea levels were low-lying coastal areas.
Policy required all large-scale new developments to achieve a low level of risk for natural hazards, including climate change impacts projected to occur over the next 100 years.
Coastal Bay of Plenty councils all said they were working to keep climate change risk information updated. Most also said climate change risks were assessed through resource and building consent processes and in community planning.
Whakatāne District Council strategic project manager Jeff Farrell said it would start a risk assessment later this year off the back of regional council work.
Tauranga City Council strategy and growth general manager Christine Jones said the council's resilience project sought to understand the risks and then how to respond to them via design, adaption, or retreats.