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strypeyIt was less than a year ago that unprecedented flooding damaged or destroyed more than 5000 homes and businesses in Tamaki Makaurau. In the immediate aftermath, former National leader Simon Bridges, by then the CEO of the Auckland Business Chamber, was calling for affected businesses to get support from the wider community;
“While the government cannot be a backstop to the uninsured, the chamber is working with central government on the flood recovery and how best to support businesses that have been significantly impacted – and in particular, those which still cannot operate.”
It's not often I agree with Simon Bridges, but as it happens, I don't think small business should have to rely on user-pays insurance to fund their recovery from natural disasters. Especially when that could have serious knock-on effects on other people's access to insurance. Michael Naylor, a Senior Lecturer in Economics at Massey University, wrote in late January;
"In the worst case scenario, the weekend's floods might mean some sections of [Auckland] city become too expensive to insure by mainstream insurance companies."
In Aotearoa, we have EQC (EarthQuake Commission) for collectively-funded earthquake insurance. So why not replicate or extend that to cover other kinds of natural disasters? This would go a long way towards both universal coverage, and avoiding unpredictable spikes in user-pays insurance premiums. Which I presume are two reasons EQC was set up in the first place.
But what’s the fairest way to pay for it?
Some natural disasters, like the downpours that have condemned houses in Whakatū (Nelson) and now Tamaki Makaurau (Auckland), are known to be amplified in frequency and severity by climate change. To subsidise the rising costs of cleaning up the resulting mess, businesses could be obliged to contribute in to a natural disaster insurance scheme, in proportion to their emissions.
Contributions from corporate polluters, who are best placed to afford full coverage from user-pays insurance, would have to be locked in. But small business could be allowed to opt-out of both payments and coverage. If they really think climate change is a hoax, then they also think they're facing the same natural disaster risk they always have, which user-pays insurance is adequate to cover. Right? I'd really like to see them put their money where their mouth is.
“While the government cannot be a backstop to the uninsured, the chamber is working with central government on the flood recovery and how best to support businesses that have been significantly impacted – and in particular, those which still cannot operate.”
It's not often I agree with Simon Bridges, but as it happens, I don't think small business should have to rely on user-pays insurance to fund their recovery from natural disasters. Especially when that could have serious knock-on effects on other people's access to insurance. Michael Naylor, a Senior Lecturer in Economics at Massey University, wrote in late January;
"In the worst case scenario, the weekend's floods might mean some sections of [Auckland] city become too expensive to insure by mainstream insurance companies."
In Aotearoa, we have EQC (EarthQuake Commission) for collectively-funded earthquake insurance. So why not replicate or extend that to cover other kinds of natural disasters? This would go a long way towards both universal coverage, and avoiding unpredictable spikes in user-pays insurance premiums. Which I presume are two reasons EQC was set up in the first place.
But what’s the fairest way to pay for it?
Some natural disasters, like the downpours that have condemned houses in Whakatū (Nelson) and now Tamaki Makaurau (Auckland), are known to be amplified in frequency and severity by climate change. To subsidise the rising costs of cleaning up the resulting mess, businesses could be obliged to contribute in to a natural disaster insurance scheme, in proportion to their emissions.
Contributions from corporate polluters, who are best placed to afford full coverage from user-pays insurance, would have to be locked in. But small business could be allowed to opt-out of both payments and coverage. If they really think climate change is a hoax, then they also think they're facing the same natural disaster risk they always have, which user-pays insurance is adequate to cover. Right? I'd really like to see them put their money where their mouth is.
