Aon New Zealand reports the weather crises faced by the country in 2023 placed New Zealand among the most expensive weather-related insurance events ever recorded worldwide.
The insurance broker’s latest Climate and Catastrophe Insights report shows economic losses were above average due to earthquakes, but the volume of severe storms were the most damaging peril for insurers.
And natural climate cycles will “dominate and control” the weather over the next decade, Aon’s ANZ Head of Catastrophe Research James Knight says.
The climate report found the single most catastrophic event last year was the earthquake that hit Turkey and northern Syria in February 2023 while New Zealand, Italy, Greece, Slovenia and Croatia recorded the costliest weather-related insurance events on record.
For the eighth consecutive year, global losses exceeded US$300 billion, marking a 22% increase over the long-term average.
“Considering weather-related disasters only, the global total was close to long-term and slightly below the decadal averages,” the report says.
Knight says New Zealand suffered more than its share of economic loss in the Pacific region in 2023, especially when per capita calculations were considered.
“Because it was a relatively quiet year globally for major, major events, New Zealand losses were up there, and so they got on the radar. I mean, normally they'd be eclipsed by typical activity in the US, for example. But, yeah, last year was a reasonably quiet year, and so New Zealand stood out, but normally, it's all typically driven by the US.”
Aon’s climate report says about half of the Asia–Pacific (APAC) losses in 2023 were in China alone, where flooding led to over $32 billion in economic losses and $1.4 billion in insured losses.
Flood-related damages remained the most costly peril for the fourth year in a row, comprising over 64% of total losses. The majority of these losses occurred in South and Southeastern Asia, regions with notably low insurance penetration.
Knight says he’s always surprised by how high the insurance penetration is in New Zealand compared to other regions globally.
“Particularly in Australia and New Zealand, the insurance penetration is high,” he says.
“You've got schemes here like the EQC which do a lot of heavy lifting for insurance in this country, which I think is great. But it’s always surprised me to see how under-insured other regions are around the world.”
Aon says in APAC, flooding remained a recurring threat with annual losses exceeding $30 billion every year since 2010 and nearly half of the APAC insured losses were related to New Zealand’s Auckland floods and Cyclone Gabrielle that hit the country last year.
Aon estimates the 2023 Auckland Anniversary flooding cost NZ$2.23 billion in insured loss, followed by Cyclone Gabrielle, which Aon estimates cost NZ$2.02 billion in insured loss.
Looking ahead
Knight says natural climate cycles will be dominating and controlling the weather over the next 10 years.
“Not surprisingly, it's obviously pretty common understanding that things are going to get worse and worse and worse rapidly,” he says.
“While the present-day climate is driving increasingly unpredictable extreme weather events and vulnerabilities for New Zealand, it does present an opportunity for organisations to take a more holistic approach to building resilience through preparedness and mitigation measures.”
Knight says New Zealand was coming off the back of “three consecutive La Niña years. And so it's been really wet. And so you had the really big floods in Australia in 2022, you've had cyclones, you've had floods in Auckland, and we're sort of coming out of that now,” he says.
“If you have more El Niño type conditions over the next few years, you'll end up with more dry, hot, settled conditions and so you'll get more fire activity.”
He adds: “La Niña tends to mean wet and more damage. El Niño tends to be good from a property perspective, but not so good if you're a farmer, for example.”
“If you're talking pure property and insurance, the insurance companies tend to prefer El Niño conditions rather than La Niña because they pay out less in claims overall.”
9 Comments
Exactly. New Zealand must be one of the most expensive countries in relative terms.
And those countries with less insurance "penetration" (lovely term that) possibly aren't so attached to the $$ value of their homes, don't view it as an economic loss and as a community probably come together to rebuild for each other.
The weather's quite normal here, but colder than usual for this time of the year. Insurance companies are using the global warming hoax to empty our pockets. My father was a car dealer. I remember him discussing the disposal of hundreds of cars that had been flooded in Southland in the 1980's. People were buying them, and hoping the damage wasn too bad. They were called "the Southland Specials".
There's nothing new in this, it's all been done before, but with the advent of the Internet, rumour passes as fact.
wingman,
"Global warming hoax". I am so pleased to see your posts-it's like being able to go back in time and watch the last of the dinosaurs wandering around.
You remind me of an infamous US senator who brought a snowball into the chamber and announced that it proved that global warming was a hoax. Keep the posts coming.
It's all been done before, only these days it's apparently caused by mythical 'global warming'.
https://my.christchurchcitylibraries.com/southland-floods/#:~:text=On%2….
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