Insurers in New Zealand have paid out over $2 billion in claims for damage caused by the Auckland Anniversary Weekend floods in January and Cyclone Gabrielle in February. However, the total cost to insurers is expected to reach $3.5 billion, according to Tim Grafton, the chief executive of the Insurance Council Te Kāhui Inihua o Aotearoa. These extreme weather events led to 112,812 claims, with over 55,000 homes being damaged, some of which have been deemed too unsafe for habitation. The government is currently working on a scheme to purchase these homes.
Of the two weather events, the Auckland flooding has proven to be more costly for insurers. Grafton mentioned that progress has been made in assessing and paying claims, with 64% of claims already settled, accounting for nearly 60% of the eventual payout to affected homeowners, businesses, and car owners. Motor vehicle claims have been the quickest to settle, with 96% already resolved, resulting in $211.6 million being paid out to owners of flood-damaged cars. Claims for household contents, such as furniture and electronics, damaged in the flood and cyclone have amounted to $216.3 million. Business claims have been more complex, with only 46% settled so far, totaling $629.5 million. House claims, on the other hand, have seen good progress, with 61% settled and $972 million paid to owners. The remaining house claims are expected to push the total payout for damaged homes to around $1.6 billion.
Grafton acknowledged the challenges faced in the early stages but commended insurers for their quick response in bringing in additional resources and implementing long-term plans to handle claims. He noted that extra staff, including some from overseas, have been deployed to assist with the process. Grafton recognized that many customers are still awaiting resolution and assured them that insurers are working diligently to address their needs.
These recent flood and cyclone events rank as the second and third-largest insurance events in New Zealand’s history, following the Canterbury earthquakes. Insurance companies such as Suncorp and IAG have warned that the increased cost of reinsurance and inflationary pressures resulting from more frequent extreme weather events may lead to higher premiums for customers. Additionally, the rising costs of building homes have contributed to the increased expenses of settling claims. Both Suncorp and IAG have indicated a shift towards “risk-based pricing,” where owners of disaster-prone homes may face higher insurance premiums.
