As New Zealand reshapes its land-use planning framework, insurers are beginning to scrutinise how the changes may influence the long-term viability of property coverage. Insurance Australia Group, the country’s largest general insurer, has cautioned that elements of the proposed legislation replacing the Resource Management Act could inadvertently complicate the future insurability of properties exposed to natural hazards.

In a submission to the parliamentary review of the draft Planning Bill, IAG argued that the proposed wording leaves too much ambiguity around how risk should be interpreted in land-use decisions. The legislation calls for “proportionate” responses to natural hazards, but according to the insurer, it does not clearly specify that such proportionality should be anchored to measurable risk levels.

For insurers, that distinction matters. Property underwriting depends heavily on the predictability of hazard exposure—from flooding and coastal erosion to landslides and earthquakes. If planning frameworks permit development in areas where long-term risk is poorly defined or inconsistently assessed, insurers may eventually face higher accumulation exposure. Over time, that can translate into higher premiums, tighter underwriting limits, or reduced availability of coverage in vulnerable regions.

IAG’s position is not that development should avoid risk entirely. In a country with complex geography and seismic exposure, some degree of hazard risk is unavoidable. Instead, the insurer argues that planning frameworks should steadily reduce systemic exposure over time, ensuring that new development does not amplify long-term vulnerability.

The implications extend beyond insurance markets. Mortgage lenders typically require property insurance as a condition of financing; where coverage becomes scarce or prohibitively expensive, property liquidity and development prospects can also be affected. In this sense, the clarity of planning legislation becomes part of the broader financial infrastructure underpinning the real-estate market.

Industry observers note that the success of the new framework will ultimately depend on several operational elements: consistent national guidance on acceptable hazard risk, reliable hazard mapping and modelling, and sufficient technical capacity among regional planning authorities. Without these foundations, translating high-level policy goals into practical risk management could prove difficult.

As lawmakers work to finalise the legislation, insurers are effectively asking for a simple principle to be embedded in the system: that land-use decisions and risk signals remain closely aligned. For the insurance sector—and for property markets that depend on it—the precision of that alignment may determine whether tomorrow’s developments remain insurable decades into the future.