70% surge in 3 years
08 Jan 2018
The cost of insurance claims from weather events has surged by 70% over the past three years, according to figures from NZbrokers. The same period also saw a 56% spike in the number of storm and flood claims.
“There are a number of variables which may impact the size of weather related insurance claims - including rising construction costs and inflation,” said Jo Mason, CEO of NZbrokers.
“At the same time the cost of electronic components inside machinery means what used to be a repairable mechanical device cannot be salvaged once it becomes wet and the manufacturer’s warranty is voided - with the only option remaining to completely replace the equipment.”
New Zealand has been ranked at a “high hazard” level for most flooding and cyclone events by the Global Facility for Disaster Reduction and Recovery, a group partly funded by the World Bank that evaluates the threat of natural disasters in countries around the world.
“The data showing the rapidly rising costs of claims should be sufficiently persuasive for companies to review not only their current level of insurance cover but also how they will maintain their business continuity,” said Mason.
Citing industry figures over the last 18 months, she said insurers have paid more than $265 million for 15 serious weather events in New Zealand, the largest being for ex-cyclone Debbie, particularly in Edgecumbe ($91.4 million).
“Weather events may cost less than a serious seismic event but the increasing frequency and geographic spread of events show every business in New Zealand should be prepared,” she noted.
In addition, she called on firms to share their preparedness plans with their insurers - the move could lead to more insurers competing for the business, and a reduced premium.
- Insurance Business