New Zealand flood industry loss estimate raised 6% to NZ $1.76bn

The insurance and reinsurance industry loss estimate for this year’s severe flooding that affected the Auckland region of the North Island of New Zealand, has been raised by just over 6% to almost NZ $1.76 billion, by catastrophe data aggregator PERILS AG.

As a reminder, soon after these severe floods occurred in New Zealand, a number of insurance carriers said they expected to make reinsurance recoveries, with Tower Limited disclosing that it expected to make reinsurance recoveries for both of the countries recent severe weather disasters, while IAG said it would recover an amount, and Suncorp also released data suggesting a reinsurance recovery was likely.

The severe flooding struck the Auckland region of New Zealand between January 27th and February 2nd 2023.

PERILS then reported an initial industry loss estimate for the North Island of New Zealand flooding of NZ $1.65 billion, on March 15th.

Now, a few weeks on, PERILS has updated the industry loss estimate, raising it just over 6% to NZ $1.76 billion.

The company said that this updated loss estimate covers the property lines of insurance business and is based on loss data collected from the New Zealand insurance market.

Darryl Pidcock, Head of PERILS Asia-Pacific, noted that, “Compared to our first report, we have observed an increase in the industry loss of 6%. Insurers are not only managing a high volume of claims for this event but face the added pressure of responding to Cyclone Gabrielle claims which occurred less than two weeks after the floods.

“There are added complexities given the overlap in some regions with losses from Cyclone Gabrielle. Notwithstanding, we greatly appreciate the support of our insurance partners during such difficult and challenging times for the industry.”

As a reminder, at the end of March PERILS initially estimated Cyclone Gabrielle’s impacts in New Zealand would cause an insurance and reinsurance industry loss of NZ $1.543 billion.

The fact these two weather catastrophe events occurred so close together was always going to drive issues in the claims process and it will be interesting to see how the Cyclone Gabrielle estimate changes when that is updated in the coming weeks.