IBANZ wants public register of properties affected by Section 72 notices

The Insurance Brokers Association of New Zealand (IBANZ) is advocating for a centralised register of properties affected by Section 72 notices to increase awareness, transparency and improve access to information.

Under the Building Act 2004, when councils grant a building consent, they can place a Section 72 notice on a property title if they consider the property is on land at risk from natural hazards such as flooding, erosion, landslips or coastal inundation. A Section 72 notice is intended to warn future buyers, lenders and insurers that the property carries hazard-related risk.

However, IBANZ Chief Executive Katherine Wilson says the implications of Section 72 notices are not widely understood.

"If a property has a Section 72 notice on the LIM report, the Natural Hazards Commission (NHC) can limit or decline claims for damage caused by that hazard. There can also be a flow-on impact for the homeowner's private insurance.

"As private insurers usually top up cover above the NHC cap, many private insurance policies will only pay out once the NHC accepts its portion of the claim, potentially leaving homeowners uninsured for the specified natural hazard risk."

As natural hazards are increasingly being identified through council plan changes, property owners face an increased likelihood of a Section 72 notice being placed on their property when building consent is required. However, property owners often need to pay a fee to their local council to determine whether a notice exists.

Wilson says it is not unusual for homeowners to discover a Section 72 notice only when they are preparing to sell their property or make an insurance claim.

"IBANZ is advocating for Government to create a centralised, freely available register of properties with Section 72 notices to increase transparency and improve access to information. We also believe there is a need for a public education campaign to support greater awareness and understanding."

The Section 72 issue forms part of IBANZ's refreshed advocacy programme, which focuses on improving natural hazard readiness, insurance accessibility and affordability, and the quality of insurance advice on behalf of New Zealand's insurance broking profession.

IBANZ has 90 corporate members employing around 5,000 people, approximately half of whom are qualified financial advisers. Insurance brokers play a vital role in protecting New Zealand consumers, businesses and communities, and the insurance sector contributes approximately three per cent of New Zealand's Gross Domestic Product.