AA Insurance has red-listed a second New Zealand town for new home insurance policies, signalling a growing retreat by insurers from communities they consider too risky to cover.The move follows the earlier red-listing of Westport, a West Coast town that has experienced repeated flooding. The newly affected town joins a growing list of communities where getting insurance is becoming difficult or impossible.When insurers won't cover a property, its market value typically collapses. Mortgages become impossible to obtain, and existing homeowners find themselves trapped with unsellable assets."This is climate change hitting people's hip pockets right now," said one climate adaptation researcher. "It's not some distant future scenario - it's happening in New Zealand towns today."The insurance industry argues it's simply pricing risk accurately. As climate change increases the frequency and severity of floods, storms, and other natural disasters, some areas become uninsurable at any reasonable premium."We can't pretend risks don't exist," said one insurance industry spokesperson. "If we keep insuring properties in high-risk areas at below-cost premiums, eventually the whole system becomes unsustainable."The red-listing raises difficult questions for policymakers. Should the government step in to provide insurance of last resort? Should communities be helped to retreat from risky areas? Who bears the cost?Similar insurance retreats are occurring in Australia, particularly in flood-prone regions of Queensland and northern New South Wales, suggesting this is a challenge both nations will need to grapple with.