New Zealand the go-to for advice on risk pool schemes
Did you know that New Zealand developed the very first natural hazards insurance risk pool scheme in the world in 1945? Given this extensive experience, New Zealand is often called on for advice on how to set up similar schemes in other countries prone to natural hazard events.
The queries tend to come from organisations such as the World Bank, the Asia Development Bank and Lloyds of London – who all see the inter-generational benefits delivered by New Zealand’s scheme. By covering New Zealanders for the first layer of damage from significant events, schemes like NHC promote wider insurance availability and affordability in New Zealand in ways that many other countries do not experience.
“Climate change is increasing the frequency of hazard events around the world and many countries are now looking at options to protect their citizens by pooling risk,” says Tina.
“The World Bank has been active in advising governments with financial exposure to natural hazards on the merits of pool schemes and points to us as one that’s been around for nearly 80 years. Countries such as Canada, Italy and Greece are now developing schemes.”
Other countries look to us to see if risk pool schemes work well as an effective protection for citizens over time, says Tina. "We’ve had a series of disasters, with the Canterbury earthquakes being the biggest one, and the scheme worked. We were able to meet all the claims made through those significant events, with some support from the Crown which was then paid back.
“Although the financial support was there, we know that many Canterbury homeowners did not have an optimum claims experience. We learnt form that and formed a private-public partnership with insurers.
The Natural Hazards Commission Toka Tū Ake is a member of the World Forum of Catastrophe Programmes. The World Forum is made up of schemes like our own, with approximately 20 members. The details of the schemes differ, but their challenges are much the same. Many of the members have schemes based on the New Zealand scheme.
Members meet annually in September to share knowledge on how they continuously improve claims experiences and adapt to emerging risks.
Tina said an emerging area of interest is resilience. “Risk pool schemes provide protection but also run the risk of blunting the signals that might otherwise prompt societal change and adaptation. Some countries are increasingly interested in our legislative mandate to reduce risk and turn the dial for society on preparedness.
We, in turn, look for innovations wherever we can from these international engagements. That includes the ways other are using technology to speed up assessments and payments after an event, research on planning and building materials, and societal incentives to make adaptations to risk.