2020: Worst-ever year for weather-related claims, insurers say

Thursday, 25 February 2021

Dave Honeyfield lost his house in the Lake Ōhau village fire, and within 11 weeks had a new one.

Bad weather cost insurers a record $248 million last year.

Over 13,600 households made claims for damage caused by weather-related claims in 2020, said Tim Grafton, chief executive of the Insurance Council of New Zealand.

The $248m in claims paid included those from the severe weather and floods across the Greater Wellington region between November 29 and December 1, and the freak hailstorm that hit the Nelson-Marlborough region on Boxing Day.

“Sudden and unexpected extreme weather can leave widespread losses for individuals and their communities in its wake,” Grafton said.

* $19.7 million worth of insurance claims paid out for Southland floods

Hailstones from the Motueka hailstorm on Boxing Day.

* Timaru hailstorm NZ's third-most destructive storm of this century

Napier’s floods resulted in around $73 million of insurance claims.

The Boxing Day hailstorm alone resulted in claims paid of $41m, he said.

New Zealand is one of the most highly-insured countries in the world, international reports show, but London insurer Lloyds lists it as the second most disaster-prone country in the world.

“It is sobering to think of the numerous orchards in the region that may not have had insurance in place,” Grafton said.

The final claims cost of the October Ōhau fire topped $35m, he said, with 180 house and contents claims, 15 business and commercial claims, and 31 claims for damaged or destroyed vehicles.

The costly weather events of the year included Napier flooding in November, which is estimated to have resulted in $73m of valid claims, Upper North Island flooding in July, resulting in $44m of claims, Southland flooding in February, costing insurers $30m, and the June Upper North Island storm and tornado, costing insurers $17m.

Grafton said climate change meant extreme weather events would become even more frequent, including more droughts and flooding.

'The impacts of climate change are very real for all New Zealanders,” he said.

“We must adapt to our changing climate and take steps to reduce risks where possible, building more resilient communities,” he said.

“This could mean improving infrastructure such as stormwater systems, not consenting new properties in higher risk areas, as well as building more resilient residential and commercial buildings.

'The sooner we adapt the less adaptation will cost us and the less we will be impacted by the increasing frequency and severity of extreme weather,” he said.

Insurers have been moving to increase premiums for owners of homes that are more exposed to extreme weather and other natural disasters.

Some homes are so exposed to changes wrought by climate change, they could become uninsurable within 15 years, a report released last year found.