Source: Insurance Council of NZ
The insurance sector is calling on all political parties to replace the current Fire and Emergency New Zealand (FENZ) levy with a simpler Community Protection Levy, redirecting funding into reducing natural hazard risk before disasters strike while moving FENZ to sustainable Crown funding.
“New Zealand needs to invest more in reducing risk before disasters happen,” Insurance Council of New Zealand (ICNZ) Chief Executive Kris Faafoi said.
“A Community Protection Levy would provide a simple, durable way to fund resilience, while ensuring FENZ has the secure Crown funding it deserves.
“FENZ plays a vital role in protecting communities and responding when disasters strike. But the current levy is too complex, too uneven, and no longer well suited to the risks New Zealand faces today.
Under the proposal, FENZ funding would move from insurance-linked levies to Crown funding, allowing around $600-700 million a year to be redirected into resilience and risk reduction.
The Community Protection Levy would be collected by insurers on behalf of the Government, ensuring a simple and efficient system for households and businesses.
This would replace the existing levy system, which currently applies different charges across homes, contents, commercial property and vehicles, making it more complicated than necessary and less suited to today’s risk environment.
“A Community Protection Levy would give New Zealanders a direct stake in reducing the risks they face,” Mr Faafoi said.
“ICNZ research shows 87% of respondents support acting early to protect communities from natural disasters. This levy would turn that support into funded, long-term projects that make a real difference.”
The case for investing earlier is clear. Every dollar invested before a disaster can return $5 to $8 in avoided losses, with recent New Zealand projects already demonstrating the benefits:
- The $4 million Taradale stopbank helped protect communities during Cyclone Gabrielle.
- The $15 million Awanui Flood Protection Scheme in Kaitaia is estimated to have already avoided around $50 million in damage.
“Councils are being asked to lead adaptation, but they need reliable funding to do it,” Kris Faafoi said.
“We cannot keep spending more on disaster recovery while underinvesting in prevention. Budget rules that treat resilience as invest-to-save would help close the gap.”
“The National Climate Adaptation Framework sets the direction, but it needs to be backed by sustained investment.
“By replacing the current FENZ levy with a Community Protection Levy, New Zealand can invest more consistently in reducing risk and better protecting communities before the next disaster hits,” Kris Faafoi said
Note: ICNZ is holding its annual conference at the Aotea Centre in Auckland on Thursday 4 June.
This year’s theme is Taking on Risk: Building Resilience Together and brings leaders from government, industry, and communities to focus on what can actually be done to reduce risk, build resilience, and keep insurance within reach for all New Zealanders.