Tower unveils inaugural cyclone response cover in Tonga

Tower unveils inaugural cyclone response cover in Tonga | Insurance Business New Zealand

Catastrophe & Flood

Tower unveils inaugural cyclone response cover in Tonga

It also reveals the number of insured families in the island

Catastrophe & Flood

By
Kenneth Araullo

Tower has unveiled its Cyclone Response Cover pilot program in anticipation of the upcoming cyclone season, providing added financial security and peace of mind to the people of Tonga.

The Cyclone Response Cover offers a swift cash payout when a customer is affected by a high wind-speed cyclone event, irrespective of damage, without requiring an insurance assessor’s approval.

In a Kavina Tonga report, Joanne Rasmussen, head of Pacific retail distribution at Tower, said that Cyclone Response Cover would significantly enhance insurance accessibility, particularly as the impact of climate change intensifies.

“Tonga was ranked as the third most at-risk country for natural hazards in the 2021 World Risk Report, but like much of the Pacific, less than 10% of families have insurance,” Rasmussen said. “Cyclone Response Cover will lessen the burden on local communities and their support networks, enabling them to recover from cyclone damage quickly. We’re doing what’s right by our customers and communities.”

For the pilot, Tower customers can choose from three product options, offering coverage from TOP$1,000 to TOP$10,000, depending on the amount they believe they need to expedite their recovery following a cyclone event.

“You are guaranteed to be paid out, if a cyclone meets certain criteria in your area, no questions asked, and no insurance assessment needed. We aim to process payments within seven days,” Rasmussen said.

A highly susceptible location

Tonga is highly susceptible to weather events, including cyclones, leaving locals to often rely on their savings, borrow money, or seek cash from other sources to begin their recovery during a cyclone crisis.

In 2018, Tropical Cyclone Gita struck Tonga, resulting in significant impacts, with Tower alone paying out approximately TOP$10.3 million in claims, known as National Pacific Insurance (NPI) at the time. In 2020, Tower paid out over TOP$2.1 million in claims to customers after Tropical Cyclone Harold.

“When we began officially rebranding from National Pacific Insurance to Tower last year, we promised the people of Tonga that the Tower name would come with new and improved offerings,” Rasmussen said. “We are so proud to be delivering on that promise so strongly already, with the launch of My Tower Tonga in February and now, with our Cyclone Response Cover pilot.”

Cyclone Response Cover was initially tested in Fiji for the 2022/2023 cyclone season in partnership with the United Nations Capital Development Fund (UNCDF), as part of its flagship Pacific Insurance and Climate Adaptation Program. Following the success of the pilot, Cyclone Response Cover is now available to all Fijians.

For Tonga’s Cyclone Response Cover trial, Tower has also collaborated with the Tonga Development Bank and the Pacific Disability Forum. The product is accessible to bank customers and forum members for the 2023/2024 cyclone season, with plans to introduce it to the broader Tongan market next year.

In a recent IB New Zealand interview, Tower chief claims officer Steve Wilson spoke about “challenges for everyone,” with the insurer making headlines after policyholder complaints regarding claims involving the extreme weather events earlier this year.

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