As climate-related perils intensify, insurance leaders are encouraging a strategic shift in how New Zealand’s insurers assess and prepare for extreme weather events.
Presentations and findings commissioned by QBE suggested the industry must move beyond traditional loss modelling to incorporate climate science into underwriting and investment decisions.
At events co-hosted by the Insurance Council of New Zealand (ICNZ) and the BusinessNZ Energy Council, Dr Joanna Aldridge of QBE and Dr Rob Bell of Bell Adapt shared the results of a climate science review aimed at insurers and policymakers.
The research addressed a broad range of weather-related perils, including flash floods, tropical cyclones, and wildfires, which are projected to become more frequent and severe.
Aldridge emphasised the importance of accessible data.
“By sharing insights, we’re supporting a shift from response to readiness,” she said. “From reacting to extreme events to preparing for them and reducing their impact. That’s the role insurers can and should play.”
The review was spurred by two major weather events in early 2023 – the Auckland Anniversary floods and ex-Tropical Cyclone Gabrielle – which each caused insured losses exceeding $2 billion.
The events surpassed historical benchmarks, demonstrating the limitations of traditional catastrophe models in the face of changing climate conditions.
New Zealand’s mandatory climate-related financial disclosures, implemented in 2024, require large insurers and financial institutions to disclose climate risks.
While initial reports focus on qualitative insights, future reporting is expected to adopt quantitative analysis.
Bell said New Zealand’s unique geography and climate variability make it essential for insurers to adopt localised models.
Separate research commissioned by IAG New Zealand showed that the country has spent an estimated $64 billion on natural disasters since 2010, with the majority allocated to post-event recovery.
The study noted that only 3% of central government expenditure during that period targeted risk mitigation and resilience.
“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,” said IAG New Zealand CEO Amanda Whiting.
Meanwhile, a survey conducted by the Natural Hazards Commission revealed that 71% of New Zealanders have taken steps to fortify their homes against hazards – a 15-point increase over the previous year.
The data also showed nearly 90% of prospective homebuyers now consider hazard exposure when evaluating properties.
AMI, State, and NZI insurance brands reported that public anxiety around severe weather has risen, with over half of survey participants citing concern about storm events.
These concerns are reflected in a surge of claims – more than 3,500 across 14 natural hazard events during spring and summer 2024 alone.
