Insurance payments of $200 million for damage from extreme weather events over 12 months through June

0

Insurers paid out nearly $200 million for extreme weather claims in the 12 months to June.

Residents of Powerhouse Road, north of Westport, had to be rescued by helicopter after heavy rain caused flooding and blocked access.
Photo: RNZ / Niva Chittock

Insurance Council data, released on Friday, showed the March floods – which devastated much of the upper half of the North Island – cost nearly $120million.

This was almost 50% more than the preliminary costs reported earlier this year.

Preliminary claims for last month’s storms, which hit the North and South Islands, already total $15.5 million.

These numbers exclude this month’s wild weather and preliminary data for these floods and storms would be available from late August.

Last year was the costliest ever for extreme weather events, with insurers shelling out $324 million.

“Communities are once again going through a difficult year,” said Insurance Council chief executive Tim Grafton.

“While we cannot say with certainty that we will see a new record high in extreme weather claims in 2022, we are seeing a steady upward trend in weather-related insurance costs in Aotearoa and abroad, which which is well established.”

The trend was straining insurers and homeowners.

More frequent and severe extreme weather events, coupled with soaring construction costs and continued supply chain stresses, were adding to insurance premiums, Grafton said.

The cost of reinsurance – insurance for insurance companies to cover very large events – was also increasing.

Private insurers Aotearoa New Zealand and EQC bought reinsurance globally from companies, which were themselves suffering record weather-related losses.

“Insurance only transfers risk, it does not reduce it. Communities must act now through local and central government to build reliance on local risks, be it floods, sea level rise sea, drought or forest fires,” Grafton said.

“There is a need to invest in both natural and man-made measures to keep risks at a level where insurance is affordable for both homeowners and insurers in the medium to long term.

“Fortunately, some communities have been spared even more severe damage thanks to some flood defenses that are working reasonably well, albeit close to their limits.

“However, they will have to consider whether this will continue to be the case as the current trend of escalating extreme events continues.”

Share.

About Author

Comments are closed.