New Zealand’s Natural Hazards Commission Toka Tū Ake (NHC) has confirmed it has arranged $10.3 billion in reinsurance protection for the national natural hazards insurance scheme, beginning June 1.
This figure marks an increase of $1.15 billion from the previous reinsurance program and includes $225 million secured through a multi-year catastrophe bond issued in 2023.
Tina Mitchell, chief executive of NHC, said the coverage aims to ensure the scheme is adequately resourced to respond to major disaster events.
“All insured homeowners across New Zealand contribute levies to the scheme. We use a proportion of those levies to purchase reinsurance cover at a national level,” she said.
The reinsurance arrangement is triggered once claims from a natural disaster exceed $2.2 billion.
Reinsurance support is provided by international firms operating in competitive markets. Decisions on coverage are typically influenced by national risk profiles and the transparency of local insurance mechanisms.
Mitchell noted that NHC’s longstanding investment in risk science has helped build international trust.
“The scheme is held in very high regard globally. Our long-term investment in research and modelling means we can give reinsurers a transparent understanding of the risks they are insuring. We are pleased to secure this level of reinsurance for New Zealand,” she said.
The last time NHC made a claim on its reinsurance program was following the Canterbury earthquakes, when reinsurers covered approximately $5 billion in related costs.
The timing of NHC’s reinsurance renewal coincides with heightened industry focus on climate resilience.
Presenters at recent industry forums co-hosted by the Insurance Council of New Zealand (ICNZ) and BusinessNZ Energy Council called for a shift from traditional catastrophe modelling to approaches grounded in current climate science.
Dr Joanna Aldridge of QBE and Dr Rob Bell of Bell Adapt shared the results of a joint review that examined climate trends and their implications for insurance underwriting. Perils including floods, cyclones, and wildfires are projected to increase in both frequency and intensity.
Aldridge said the goal is to support a forward-looking approach.
“By sharing insights, we’re supporting a shift from response to readiness. From reacting to extreme events to preparing for them and reducing their impact. That’s the role insurers can and should play,” she said.
The shift comes as large financial entities, including insurers, must now comply with New Zealand’s climate-related financial disclosure rules. These requirements came into effect in 2024 and demand greater transparency on how organisations assess and manage climate risks.
While early disclosures emphasise narrative insights, future reports are expected to quantify those risks more directly.
Bell said that because of New Zealand’s distinct climate and topography, insurers need region-specific modelling tools to meet these obligations.
Separate analysis commissioned by IAG New Zealand showed that $64 billion in public funds has been spent on disaster recovery since 2010, with only a small fraction invested in mitigation.
Amanda Whiting, chief executive of IAG New Zealand, said the pattern reflects a structural issue.
“These costs represent a drag on our economy and work against the growth and financial strength required to support the needs and aspirations of New Zealanders,” she said.
Public engagement with risk reduction appears to be increasing.
According to NHC survey data, 71% of New Zealanders reported taking action to reduce home vulnerability to natural hazards – a 15-point rise compared to the previous year. Nearly nine out of ten prospective homebuyers now assess hazard exposure when choosing properties.
Insurance providers AMI, State, and NZI also reported a rise in public concern around severe weather.
