Finance Minister rejects insurers’ call for $700m disaster‑resilience levy

Thursday, 4 June 2026

Finance Minister Nicola Willis poured cold water on insurers’ proposal for a $600 million to $700 million levy on house and business insurance policies to fund disaster resilience projects around the country.

The Insurance Council of New Zealand (ICNZ), which is the political lobbying association for the insurance industry, made the call for a Community Protection Levy on the eve of its annual conference in Auckland on Thursday.

The proposal would require the Crown to fund Fire and Emergency New Zealand from the general tax pool, removing the current levy on insurance policies that pays for the service.

But Willis, speaking at the conference, pushed back on the idea, saying there was “no endless magic money-tree forest” to come up with a new pot of money.

However, she acknowledged: “The era of extreme climate events is upon us.”

ICNZ chief executive Kris Faafoi opened the conference with a call for politicians to back the levy plan to fund resilience projects in at-risk communities, like flood defences.

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“The CPL, as we are calling it, would collect around $700 million per annum to proactively invest in resilience measures, first to protect Kiwis and their communities. These investments would safeguard the accessibility of insurance into the future. Our message in an election year is clear. Political parties need to work together to see this, or something like this, become a reality,” Faafoi said.

“Some may attempt to poke holes at it, but the kicking of the can cannot go on for much longer, as we watch families, communities, and businesses picking up pieces,” he said.

A list of local projects had already been drawn up, and they needed funding.

“It's time to stop ignoring the problem,” Faafoi said.

However, Willis said she did not think the levy plan was necessary.

She said the Government was investing significant sums in resilience of infrastructure, including rail and road.

It was also working to end the “haphazard” way in which government managed, and insured, the assets it owned, like roads, rail and school, Willis said.

She said countries needed strong balance sheets to be able to respond to natural disasters, pointing to spending cuts by the Government.

“Resilience is not a slogan,” she said. “It does mean living within our means so we have capacity when shocks occur, investing before infrastructure fails, understanding risk earlier and making decisions today that reduce costs tomorrow.

“It often occurs to me that one of the reasons that the John Key/Bill English government was able to respond so decisively to the Canterbury earthquakes, was because of Michael Cullen’s efforts ahead of them to maintain a prudent debt position.

“Economies that fail to respond to changing risks will fall behind,” Willis said.

The conference heard of frustration from insurers and councils that development in areas at higher risk of flooding had been approved through the Government’s Fast Track process, and also that councils did not have a “safe harbour” law that protected them from being sued for declining consents for homes on disaster-prone land.

Rehette Stoltz, mayor of Te Kaunihera o Te Tairāwhiti Gisborne District Council said her region was giving New Zealanders a view of what the future looked like.

“It is New Zealand's future arriving early. I have stopped counting how many civil defence emergencies I have declared,” she told conference delegates.

Stoltz said current funding mechanisms were unfit to deal with the problem.

“We need durable co-funding. We need adaptation, planning, and we need stronger national direction,” she said.

Councils faced rates-capping, while at the same time having to spend millions of dollars a year on disaster resilience, and rebuilding

“Every time it’s local balance sheets that have to pay for that, and we can’t afford to keep doing that,” Stoltz said.

Willis said the Government was working on reforming the planning system to create national consistency, and developing its National Adaptation Framework, which was designed to help Kiwis better manage growing climate risks while reducing long-term costs.

“An important component is proposed legislation requiring councils in high-risk areas to prepare adaptation plans for hazards including flooding, alongside the national policy statement for natural hazards, which strengthens how risk is managed for new developments,” she said.

Willis was followed at the podium by leader of the opposition Chris Hipkins, who also saw the Community Protection Levy as politically viable.

He did not announce any new policies, but said the Government had weakened the country’s climate adaptation response, and said it was “mind-blowing” that the country was still building homes in disaster-prone areas.

“New Zealand's exposure to weather-related risks is continuing to increase rapidly, and with that, the urgency to act is increasing as well,” he said.

“Quite frankly, many people are seeing not enough action, and that should be of concern to all of us because if New Zealand is seen as being too slow to adapt, too slow to invest in our resilience, or unwilling to confront some of those difficult planning decisions, that's going to have direct implications for insurance affordability, and even availability as well,” he said.