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2015/FMP/SEM1/015 Session: 6

Institutional Arrangements for Disaster Risk Mitigation and Adaptation

Submitted by: New Zealand

Seminar on Disaster Risk Finance – APEC Roadmap for Resilient Economies

Bacolod, Philippines29-30 April 2015

APEC Roadmap for Resilient Economies

Institutional arrangements for disaster risk mitigation and adaptation

The Philippines April 2015

New Zealand’s location on the Pacific “ring of fire” means it is prone to earthquakes, volcanic eruptions and tsunami

Every year there are about 15,000 earthquakes in New Zealand. About 100 – 150 of these are large enough to be felt by the population

With a population of around 4.5 million people and high natural disaster risk, New Zealand has positioned itself as a viable insurance and reinsurance market with a mixture of public and private insurance provision

Natural hazards and New Zealand

Disaster insurance in New Zealand

Residential

Basic cover

Public insurance through EQC

Automatic with fire insurance

Top-up cover

Private insurance

Voluntary

Private cover

Voluntary

Mixed public/private provision

Non Residential

The Canterbury earthquakes 2010-2011New Zealand’s worst natural disaster since 1930s

185 lives lost

Economic losses estimated at NZ$40 billion – 20 per cent of GDP

Insured losses estimated at NZ$30 billion

Over 750,000 insurance exposures (dwelling, contents and land claims)

The greatest extent of observed liquefaction in an urban area ever

3 of top 10 costliest global earthquakes: insured loss

New Zealand’s 2nd largest city

Estimated EQC Liability $NZ11.5 billion

Claims (exposures) received

Building claims 425,556

Contents claims 186,902

Land claims 149,293

Total claims 761,751

Clean heat installations 19,000

House repairs completed in

Canterbury Home Repair

Programme

65,102

Total payments by EQC to date $NZ8.3B

EQC Canterbury response: vital statistics

Data as at 1 March 2015 As at 27 February 2015

68, 475 Homes in the Canterbury Home Repair Programme

Sendai Framework for DRR 2015-2030

• Priority 3: Investing in disaster risk reduction for resilience

National and local levels

30. To achieve this, it is important to:

(b) Promote mechanisms for disaster risk transfer and insurance, risk sharing and retention and financial protection, as appropriate, for both public and private investment in order to reduce the financial impact of disasters on governments and societies, in urban and rural areas

UN promotes access to insurance

Margareta Wahlström, UN Special Representative of the Secretary-General for Disaster Risk Reduction:

“We cannot be resilient without access to insurance systems. Insurance helps people and countries recover more quickly after a disaster if they are insured. Loss of economic capacity is one of the hardest issues for people to face and we need mediation between the insurance industry and public sector. Disaster risk is a critical issue for all countries around the world. Many disasters have not yet happened and therefore most insurance policies have yet to be written.”

Sendai discussion – trust in the insurance industry perceived as an issue, particularly in developing nations

Risk modelling – what we learned

The reality of a catastrophic event, in New Zealand’s experience, is quite different to the modelling – multiple events vs single event; 470,000 claims vs 150,000 in the model

Modelling is obviously essential to risk pricing but does it appropriately consider the variables?

What is the objective – different objectives have different costs and different policy and financial implications?

People are involved and they can be unpredictable - depth of social/psychological impacts

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Inangahua 1968 Gisborne 2007 All Canterbury quakes

Estimated major Wellington quake (2009 review)

Estimated large scale event (2009 review)

Claims lodged

Scale of Losses

Canterbury Geotech Database – an online database where collaborative data-sharing gives a clear “big picture” -transportable technology

Data used to facilitate the greater Canterbury earthquake recovery process

Data used to zone land according to damage – more than 7000 homes in the red zone deemed uninhabitable and purchased by the NZ Government

Data to inform national and international community resilience to future natural hazards

Data continuously updated by users

Sharing information to build resilience

Sharing information and trust

Canterbury Geotech Database contains data from:

60,000 residential property inspections in Canterbury

More than 500 square kilometres of LiDAR mapping

22,000 sub-surface investigations drilled over 150 sq kms

Ground-based liquefaction mapping that covers more than 100 sq kms

Data sharing requires trust – the Canterbury Geotechnical Database has:

2612 users from

581 organisations in

32 countries

35,000 uploads and 750,000 downloads

EQC mandate: building resilience

Public education

Encourage steps to reduce the

effects of geological disasters

Research

To understand and reduce

vulnerability to geological

hazard

Natural disaster insurance

Mitigate the financial impact

of geological disasters on

home owners

Research to build a safer New Zealand

EQC’s research programme aims to improve knowledge and professional practices, in order to:

Reduce the Government’s liabilities from geological hazard events and

Make communities more resilient to such events

Learning from Canterbury research

EQC led international research programme to identify affordable and practical solutions to improve or strengthen land vulnerable to liquefaction

This Ground Improvement Programme is a world-leading research project that informs appropriate ways to build on land vulnerable to liquefaction

Applicable to anywhere with a similar geological environment to Canterbury

Using this information planners, decision-makers and engineers can better manage and reduce the economic and social impact of liquefaction-related disasters to improve resilience of communities

18-month programme supported by other New Zealand government agencies and the National Science Foundation in the US

GeoNet helping build a safer New Zealand

New Zealand’s nationwide, 24/7, geological hazard monitoring system

A network of more than 600 geophysical instruments (sensing equipment) located throughout New Zealand – integrated with software applications

Data managed and analysed by skilled personnel – to improve the detection and understanding of earthquakes, volcanic unrest, land deformation, land stability, geothermal activity and tsunami

Information is used by emergency managers, scientific researchers, engineers, lifeline utility groups, planners and the general public (website, social media and smartphone app)

Provides real-time data sharing with other major data centres in Australia, USA, Europe, and Japan

www.geonet.org.nz

GeoNet Quake app and channels

iPhone and Android - over 150,000 users of the Quake app

Push notifications give up to the minute quake alerts

GeoNet website – web traffic more than 1 billion hit rates per year

45,000 Facebook followers

Public education

Public education – sponsorship; school programmes; publications and Web (www.eqc.govt.nz)

Raise awareness and present practical information to reduce impact

Limit insurance liability and reduce cost of reinsurance

Questions – for discussion What are the benefits of Government involvement in risk

financing/insurance? Should Government be involved?

Who should have access to/share data and land information to:

Understand risk

Mitigate risk

Build resilience?

Is the insurance industry future-focused enough in modelling and product offering to match global demand and the pace of technology?

What steps would build more customer trust and therefore, greater uptake, of insurance?

Thank you

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