2022: Worst ever year for weather-related claims, insurers say

Wednesday, 14 December 2022

An aerial shot taken from the Nelson Marlborough Rescue Helicopter showing the full extent of the damage. This photo shows flooding around north Nelson and Glenduan.

Extreme weather related claims have topped $335m, a new record for the country, figures from the Insurance Council show.

Chief executive Tim Grafton said as the trend for long term global warming continued, people could expect records to keep being broken.

“There is a clear pattern here of repeat bands of extreme rain saturating the ground making it more prone to slips, flooding and resultant infrastructure damage, including to roads,” Grafton said.

In 2021, the insurance industry paid $305 million as a result of weather-related claims, up from $274m of weather-related claims the year before.

* Insurers pay record $305 million for extreme weather claims in 2021

Whitewear from Nile St residents that had to be thrown out after the Maitai River flooded in August. Claims from the August flood in Nelson were $31m.

* 2020: Worst-ever year for weather-related claims, insurers say

Insurance Council of New Zealand communications manager Christian Judge says insurers are well aware of the trauma flood hit householders experience.

The country experienced “wave after wave of extreme wet weather” this year during what NIWA declared as New Zealand’s warmest and wettest winter on record.

Grafton said that was certainly reflected in the damage and disruption across the motu (country).

ICNZ communications manager Christian Judge said this year’s Insurance Council’s figures would rise further as November’s tally was not yet included.

Judge said they expected extreme weather claims to continue to increase, though claims were “one part of the total” cost of the events.

There were some things that could not be insured, or were underinsured, and there was also the cost of disruption to the community and businesses.

ICNZ chief executive Tim Grafton said there was a “clear pattern” of repeat bands of extreme rain saturating the ground making it more prone to slips, flooding and resultant infrastructure damage, including to roads.

“We know as insurers all the trauma it causes people to have water go through the house … our scope of cover is pretty good, but it doesn't compensate you for your upset, or sentimental loss of things and just having to go through dealing with all of it.”

Across New Zealand, five weather events over July and August generated 11,086 claims totalling $123m.

The Insurance Council’s final figures were up 35% or $32m on the provisional reporting of $91.6m for those climate related events, which Judge said was “not unusual”.

Nelson Tasman’s claims for the August floods came to a total of $31m, from 1575 claims. Of those domestic claims accounted for $20m, commercial material damage claims came to $7m and business interruptions/loss of profit claims $1.1m.

In addition, $489,000 was claimed for 61 motor vehicles.

Weather events across New Zealand from July 11 to 13 resulted in $18m of claims, events from July 17 to 21 $20m and July 24 to 27 $18m.

Flooding to regions outside of Nelson from August 18 to 21 tallied up to $36.7m of claims.

The impacts of record claims are likely to be felt in the pockets of those paying premiums.

“What we're seeing in New Zealand is a trend in rising insurance costs,” Judge said.

The international reinsurance market, where all New Zealand's local insurers bought reinsurance, was getting “harder” as climate related claims increased globally year-on-year, he said.

Local and worldwide climate impacts and inflation were also “headwinds” on premiums, though “every individual insurer made their own price decisions”.

General inflation was running at about 7%, which meant the cost of the goods bought that were later insured went up, so therefore payouts were going up, Judge said.

If risks were not reduced then the trauma, risk to lives and damage to the environment, economy and communities would keep getting worse.

“We need to be investing in resilience at a local level, and that's best driven by communities and implemented by local and central government.”