The Insurance Council of New Zealand says a new national direction to councils should stipulate that they avoid building in locations at high risk of natural hazards.

The government’s proposed Resource Management Act phase two includes the ability to decline land use consents or to attach conditions where there are significant peril risks.

“New Zealand needs to take a long-term perspective that fosters the broad availability of insurance,” ICNZ CEO Kris Faafoi said. “This entails prudent land use planning that avoids new developments in high-risk areas susceptible to natural hazards.”

About 461,000 buildings are at risk of coastal or inland flooding in New Zealand, and Mr Faafoi says the proposed national direction on natural hazards will provide consistency and ensure “we build in the right places”.

“By prioritising and embedding resilience in decision-making processes, New Zealand can mitigate the adverse impacts of natural hazards and safeguard the wellbeing of its communities,” he said.

Mr Faafoi adds the Finance and Expenditure Select Committee’s recently released Inquiry into Climate Adaptation report is an “important signal of the need to urgently tackle the impact of climate change”.

“We now need cross-party consensus to face that challenge,” he said. “It is a valuable reminder of the urgent task ahead. This is an opportunity for New Zealand to act now and reduce the risks climate change poses to future generations.”

Treasury estimates the damage to infrastructure in the North Island from last year’s floods and Cyclone Gabrielle is up to $NZ14.5 billion ($13.31 billion).

ICNZ wants a lead agency on climate adaptation to be established to bring together central government, councils, the private sector and communities to mitigate risks.

“We support a framework that would create a consistent approach nationally but allow for local flexibility,” it said.

“ICNZ supports improving the quality, consistency and availability of natural hazard and climate risk data to ensure we avoid building in dumb places. This will increase transparency and awareness of risk ... which can then lead to more resilient, safer and stronger communities which will have greater access to affordable insurance.”

Options also include the development of financial instruments such as resilience bonds, ICNZ says.