Wellington needs to rethink its strategy for protecting against earthquakes as insurers reassess their approach as the dangers become better understood, a Mayor’s Insurance Taskforce report says.

“Wellingtonians should no longer take for granted our cultural assumption that risk can be transferred on to insurers,” the taskforce report says.

“That means the city needs to rethink how we manage risk, with a better balance of transfer, mitigation, acceptance and avoidance.”

The taskforce in the New Zealand capital was triggered by concerns about insurance pricing and availability in the city following a surprising level of local damage caused by the Kaikoura earthquake, which was centred 155km away.

“Insurers sometimes liken themselves to the ‘canary in the coalmine’,” the report says. “In the context of this metaphor, the canary’s singing is faltering.”

The Canterbury and Kaikoura earthquakes have driven a leap forward in scientific research and understanding that is not being reflected in building and planning regulations, the taskforce says.

“New Zealand has not substantially rethought its approach to seismic risk, and the lessons learned from those earthquakes have been applied piecemeal.

“Insurers, by contrast, have learned their lessons and markets are responding.”

The report, submitted to Finance Minister Grant Robertson, says previous New Zealand initiatives to create a cross-sector approach have lost momentum and a Wellington leadership group should be created.

The Insurance Council of New Zealand (ICNZ), which participated in the taskforce, says the report recognises that the core issue for Wellington is to build resilience, and that this is a responsibility for many institutions including insurers.

“Importantly, the report is clear about the need to avoid masking signals to address risk,” CEO Tim Grafton said.

Proposals include reforms to building codes, consumer awareness action, facilitating dialogue with brokers about alternative insurance products, investigating the potential for pooling buying power and access to offshore insurance through brokers or a government entity.

The report says past commercial building designs have focused on protecting lives in a limited moderate earthquake scenario, without reflecting the need for greater structural resilience to reduce economic and social disruption.

“In Wellington the probability that we will have a severe earthquake is actually 100%, we just don’t know exactly when.”

It also proposes immediately commissioning research to determine if building owners, particularly body corporates, are not taking out insurance because of price or lack of availability, and to look at any indicators of systemic household underinsurance.

ICNZ has already said it opposes looking at raising the Earthquake Commission (EQC) cap to $NZ400,000 ($370,948). The report also suggests the EQC could provide some form of commercial cover in addition to its residential mandate.