News09 Jan 2018

New Zealand:Cost of storm and flood claims surge by 70%

| 09 Jan 2018

The number of storm and flood insurance claims in New Zealand has risen by 56% over the last three years, pushing up the cost of claims to insurers by 70%, according to Ms Jo Mason, chief executive of NZbrokers which is New Zealand's largest insurance broking collective.

Ms Mason said: “There are a number of variables which may impact the size of weather related insurance claims – including rising construction costs and inflation.

“At the same time the cost of electronic components inside machinery mean, what used to be a repairable mechanical device cannot be salvaged once it becomes wet and the manufacturer’s warranty is voided – with the only option remaining to completely replace the equipment.” 

Ms Mason said the international Global Facility for Disaster Reduction and Recovery (partly funded by the World Bank) which evaluates the threat of natural disasters in countries around the world, has now ranked New Zealand at a ‘high hazard’ level for most flooding and cyclone events.

She said: “While we were already rated as a high risk for seismic activity, now storm and flood losses in our market are on their radar as well.

“At the same time, data from the World Meteorological Organisation (WMO) is projecting the number of weather disasters will continue until the 2060’s.

“Of particular concern for New Zealand, is the fact ocean temperatures are among the warmest on record and global sea levels are continuing to rise, so far by 26 cm.”

Ms Mason said that businesses need to ensure they are prepared for these types of adverse events.

“The data showing the rapidly rising costs of claims should be sufficiently persuasive for companies to review not only their current level of insurance cover but also how they will maintain their business continuity.”

Ms Mason said that according to industry figures for the last 18 months, insurers have paid more than NZ$265 million (US$190 million) for 15 serious weather events in New Zealand. The figures show that there is no particular region affected more than others.


 

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