Kris Faafoi is chief executive of the Insurance Council of New Zealand | Te Kāhui Inihui o Aotearoa (ICNZ). This article appeared in The Post on 3 June 2025.
OPINION: The Christchurch earthquake in February 2011 lasted just ten seconds.
But in that brief moment of time, lives were lost, communities shattered, and the region’s economy thrown into chaos.
The cost? All up, over $40 billion.
Fast forward to 2023. In just a few weeks, the Auckland Anniversary Weekend floods and Cyclone Gabrielle racked up $14.5 billion in damage across the upper North Island and East Coast.
Now as Budget 2025 fades from the headlines, so too does another opportunity to tackle one of New Zealand’s most urgent challenges: climate adaptation.
It’s time to stop kicking the can down the road.
The science is unequivocal. The risks are growing. And the cost of inaction is exploding.
We need to start treating climate resilience not as an optional extra, but as core infrastructure.
New Zealand is especially vulnerable to natural hazards—earthquakes, floods, coastal erosion. Climate change is making these events more frequent, more damaging and more expensive.
The financial toll is already massive. And it’s only going to get worse.
Reserve Bank stress tests of a major Hikurangi Subduction Zone event show potential losses of $100–$125 billion – up to 30% of GDP. The Government’s share of the recovery? As much as $75 billion.
These aren’t just numbers. They represent homes, jobs, businesses, and lives.
Yes, successive governments have kept public debt low to prepare for a rainy day.
But being ready means more than balancing the books. It means investing ahead of time to reduce the impact of these inevitable disasters.
The bottom line is that resilience is cheaper than recovery.
Research shows that every dollar spent on climate adaptation delivers strong returns. It’s not just smart policy—it’s good economics.
It grows the economy, creates jobs, and funds critical projects—like flood defences, resilient infrastructure, and regional development.
Reducing the exposure of communities and critical infrastructure to earthquakes, flooding and coastal erosion has to be a better long-term alternative for the Crown than the long history of forking out billions in response funding.
And as the Government ends up footing a sizeable portion of the recovery bill, investing in resilience now is also a sound financial strategy.
We know what’s coming. GNS puts the odds of a major Alpine Fault rupture of magnitude 8 or above at 75% in the next 50 years. More frequent and severe weather events are predicted to increase.
It’s not a matter of if, but when.
Future Budgets should tell Kiwis how the Government will deal with these events.
As well as telling us what a Government plans to do when all is going well, they should outline their plans to prepare and respond for when things go wrong.
Importantly, the Government should be upfront and set out how they will invest in reducing the risk of damage to our communities and in ensuring a speedy recovery.
The measures to prepare, recover and keep Kiwis safe are the same measures that will keep insurance affordable and available in the long term.
It’s time for a new approach.
We should treat climate resilience the way we treat roads, hospitals, and schools—as essential.
That means integrating resilience planning across sectors: in housing, transport, water systems, and agriculture. It also means long-term, sustained funding—not reactive, short-term fixes.
Future budgets must show a stronger commitment to adaptation. That means long-term investment, cross-sector planning, and treating climate risk as a national priority.
We have the knowledge. We have the tools. Now we need a plan and commitment that spans political cycles.
Let’s not wait for the next disaster to force our hand.
We know they are costly and deadly. And the science is telling us they are coming.
