Event is the largest weather-related loss for New Zealand and third largest catastrophe loss for the sector
Zurich-based PERILS has disclosed its initial industry loss estimate for the floods in the North Island of New Zealand during the period of 27 January to 2 February 2023.
Based on loss data collected from the majority of the New Zealand insurance market, it puts total property insurance losses at NZ$1.65 billion.
Total economic losses from the North Island floods and Cyclone Gabrielle are estimated at around NZ$10 billion, according to statistics from GlobalData.
From 27 January to 2 February 2023, extreme rainfall caused severe inundation across the greater Auckland Region and surrounding areas on the North Island of New Zealand, resulting in the costliest weather event for the region’s insurance industry to date.
The event was fuelled by extraordinarily warm and humid weather throughout the summer which culminated in record-breaking rainstorms on 27 January and 1 February.
These caused intense pluvial, fluvial and sewage flooding which affected a large number of insured properties. Four people died in the event and several thousands were evacuated following a rare red-alert state of emergency declaration.
The record rainfall amounts were driven by a pronounced atmospheric river which brought moist and warm air masses to New Zealand which collided with strong easterly winds that triggered the heavy convective rainfall over the North Island.
Although similar rainstorms have occurred in the past, these had previously spared major cities, whereas in this case Auckland was severely impacted.
Rethinking extreme losses
Darryl Pidcock, head of PERILS Asia-Pacific, commented: “This event is unprecedented being the largest weather-related insurance industry loss historically for New Zealand. It is the third largest Cat event for the sector, only surpassed by the Canterbury Earthquakes of 2010/11 and the Kaikoura Earthquake of 2016.
”In addition, Cyclone Gabrielle passed through the North Island region only ten days after the North Island Floods, causing considerable damage and leaving many people homeless.
“For two such extreme weather events to occur within such a short period is unprecedent in New Zealand’s recent history and will test the industry’s existing understanding of these perils.”
The catastrophes are a reminder of the need to ‘build back better’, according to the Insurance Council of New Zealand.
“Repairing and rebuilding property and infrastructure in high-risk areas to the same specifications as the past will only lead to a repeat of the dreadful consequences we have all seen,” said the Council’s CEO Tim Grafton.
”Indeed, it could be worse with more extreme and frequent weather events as a result of climate change.
“Now is the moment to reset and ask questions about whether to rebuild in some locations and if we do how to rebuild better to better protect ourselves.”
No comments yet