Insurance claims after flood and cyclone 'absolutely unprecedented'

Thursday, 16 February 2023

Cyclone Gabrielle has left homes destroyed, like this one in Muriwai near Auckland.

We are less than two months into 2023, and already insurers fear the year has topped 2022’s record for extreme weather claims.

IAG, which owns the AMI, State and NZI Insurance brands, has so far had 2300 claims from property-owners as a result of flooding and damage from Cyclone Gabrielle.

That came on top of more than 21,000 claims as a result of the Auckland and Northland flooding at the end of January.

“What we're talking about is these two events exceeding the record year for insured losses for extreme weather events. And we've got 10 months of the year to go. It is huge,” Tim Grafton, chief executive of the Insurance Council of New Zealand Te Kāhui inihua o Aotearoa, said.

* Insurers State, AMI and NZI have now logged 21,000 claims from January flooding

When the Makarika River broke its banks, several Māori families were in the firing line.

* More than 13,600 flood claims now lodged with insurers

The combination of the Auckland Anniversary monsoon deluge, and ex-tropical Cyclone Gabrielle, was unprecedented in terms of extreme weather event losses for the insurance sector, he said.

“We don't have a handle on any exact figures, but we do safely say that it will run into the hundreds of millions of dollars,” he said.

It looked set to eclipse last year's record claims costs for insurers from extreme weather events.

Claims numbers following Cyclone Gabrielle will continue to rise, says Amanda Whiting, chief executive of IAG New Zealand.

“The cost of 2022 extreme weather events in insured losses was $350 million,” Grafton said.

Insurers have blamed rising costs of extreme weather claims both on the increasing frequency of extreme weather events, but also high inflation, especially rises in the cost of building and repairing homes, and fixing or replacing damaged cars.

When IAG revealed its latest profit result to investors on the Australian ASX sharemarket, it signalled doubled-digit percentage rises in households’ insurance premiums, partly as it expected to face an increasing number of “natural perils”, such as floods and storms.

IAG said as of 9am on Thursday, it had received about 2300 claims, and expected the number to rise significantly in the coming days.

“Most of these claims are from Auckland, Northland, Waikato and the Bay of Plenty,” chief executive Amanda Whiting said.

“It is not surprising, at this stage, to see small numbers from the Hawkes Bay and Gisborne as people are evacuated, isolated or have limited access to communications.”

She asked people who had non-urgent insurance claims unrelated to the flooding and cyclone to delay lodging them.

“Given the nature of these events, we ask customers outside the impacted areas to wait to lodge any claims they may have, unless they are urgent,” she said.

“This will enable us to prioritise our efforts to flood and cyclone-affected customers first.”