Tens of thousands of coastal homes might not be eligible for insurance due to the increasing risk posed on them by the effects of climate change, a new report suggests.
A 2015 report to the Parliamentary Commissioner for the Environment found New Zealand has 43,683 houses within 1.5m of high tide and 8806 within 50cm.
Now, a report by Motu Economic and Public Policy Research exploring the effects of climate change on insurance suggests those homes could become no longer eligible for insurance.
Report co-author Ilan Noy, a disaster economics researcher at Victoria University, said those houses would be too exposed to sea-level rise, to storm surges, to riverine flooding and they will no longer be sustainable to be there.
"We argue that currently most of these homes are insured, but at some point in the future insurance will no longer be available to these homes.
"All insurance policies are one year policies in New Zealand and probably elsewhere. So insurance can retreat very quickly from places where they think the risk is too high.
The Intergovernmental Panel on Climate Change Working Group I report in 2013 said average emissions under the most optimistic scenario would lead to sea level rise of between 44cm and 55cm by the year 2100.
That was increased to 1m under the current 'high' emissions trends.
Professor Noy said the idea of the report was to get more discussion going around how to address the problem that thousands of coastal homes may not be eligible for insurance in the future.
"The question is what do we do about that? What we're trying to say in this report is that there are a lot of questions that we need to look at that have to do with this specific focus on homes, sea level rise and insurance.
"We better start thinking about them now rather than in 20 years time or whenever it is when insurance is already out the door."
Climate scientist Jim Salinger said it was largely local and regional councils that had taken on the bulk of the work in preparing for higher sea levels.
He said he wanted to see central government play more of a role.
"Because of the magnitude of costs, and potential ability not to be able to cover with insurance, a national policy statement developed between central and local government is required to set policy on storm risk and flooding, especially due to sea level rise."
He said New Zealand should follow in the footsteps of the Netherlands where a national strategy has been adapted, with the Dutch government no longer providing protection for new developments in high-risk areas.
He said that would discourage development in the areas likely to face problems because of climate change.
Insurance Council chief executive Tim Grafton said insurers would eventually stop offering cover to coastal homes, but it would be gradual and well signalled.
"Insurance will signal in a gradual way areas and localities around the country where the risks are becoming increasingly higher.
"That will happen over time," he said.
Mr Grafton said the point of the reasearch was to look at what could be done to reduce the risks.
"Whether that's in terms of people's behaviour or whether that's in terms of quantifying the costs and working out what the potential impacts and policy options are, all of that's really quite critical.
"For insurance it is a slow, but steady signalling that the risks are getting higher.
"Obviously when they get too high then insurance does not insure certainty. It insures accidental and unexpected risks."