Extreme weather costs NZ insurers

A storm in New Zealand.
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Insurance

New data from the Insurance Council of New Zealand (ICNZ) illustrates the impact of extreme weather events on the insurance sector – according to the recent figures, insurers in New Zealand have spent over NZ$226 million over the course of 2018 helping customers to recover from such events. This makes 2018 the second most expensive year for severe weather incidents since 1969.

A total of 33,064 claims were filed throughout the year, costing $226.4 million, and Tim Grafton, Chief Executive of ICNZ, said that the intensity of the year’s weather and the resulting financial impact should be a wakeup call: “To have two years in a row in the three most expensive years on record is an indicator of the increasing frequency and intensity of storms in New Zealand,” he said. “This is in large part due to the impacts of climate change. It’s critical New Zealand adapts to the changing climate; it’s impacting on our communities and it’s impacting on our economy.” He cited a recent report from the New Zealand Treasury which suggested that in the decade leading up to 2017, climate change-induced drought alone cost the country $720 million in economic losses; this suggests that the losses from flooding, severe weather and other climate change effects ‘will be much greater’: “These impacts can only increase the longer we fail to adapt.”

Grafton went on to cite new research from New Zealand’s National Institute of Water and Atmospheric Research, which found that there are 125,600 buildings in New Zealand, and $38 billion of replacement costs, within 0-1 metre of sea level rise. Concerningly, it is near certain that sea levels will rise by between 0.2 and 0.3 metres over the next two decades. “With these sea level rises come increasing risks from storms and coastal inundation,” said Grafton, “as well as the increased risks of ever higher water tables and sunny day flooding.”

It is imperative, he said, that people’s concerns about climate change are converted into concrete action such as improving infrastructure, moving properties away from coastal areas and floodplains, and making sure that new builds are more resilient in the face of climate breakdown.

“The sooner we adapt to our changing climate,” he concluded, “the less adaptation will cost us and the less we will be impacted by the increasing frequency and severity of storms.”