Global natural disasters continue to cost insurers billions, as New Zealand has a relatively ‘quiet’ 2025 with three events totalling at least $120 million

Severe convective storms were the costliest peril in 2025, leading to US$61 billion (NZ$102 billion) in insured losses globally, according to insurance broker Aon.

This is the third highest on record, Aon’s latest annual Climate and Catastrophe Insights report says.

Convective storms are more commonly known as thunderstorms and are associated with heavy rain, lightning, hail, strong gales and temperature changes.

The report, which reflects on 2025, shows after having no significant natural disasters in 2024, New Zealand experienced three extreme weather events totalling at least $120 million in insured losses.

Two out of the three events were severe convective storms - one in April 29 to May 1 costing $20 million and another in June 26 to July 3 which cost $50 million. New Zealand also experienced Ex-Cyclone Tam from April 17 to April 18 which totalled $50 million.

Head of Asia-Pacific for Aon's view of risk advisory, James Knight, told interest.co.nz these storms tend to be water and wind but the main driver of damage is hail.

“Up until 2023, our largest weather event was from a hailstorm, the Timaru hailstorm.”

In 2019, hailstones the size of golf balls damaged buildings and cars. The Insurance Council of New Zealand, in 2020, reported that it led to insured losses of $170 million.

Knight says when it comes to hail in New Zealand, we tend to be reasonably lucky as it was very unlikely hail stones would get up to a size that is damaging to building structures. "They tend to be below two centimetres in diameter and they tend to be more damaging to agriculture and crops."

But this wasn't the case for places like Australia. The Insurance Council of Australia recently reported that while the costliest event for 2025 was Ex-Tropical Cyclone Alfred which saw 132,000 claims lodged and more than A$1.5 billion (NZ$1.7 billion) in insured losses, hailstorms in October and November left similar damage bills.

Knight says this shows how significant damages can be from severe convective storms and hail.

“It actually tends to drive what we call the average annual loss. It’s the peril that drives the total on average every year ... And it’s actually just taken over in the US as being the main loss driver.”

Knight says the storms have just gone above tropical cyclones for the first year in terms of aggregate loss, “which just shows you that it’s here to stay and it’s increasing because we’re putting more stuff in the way essentially”.

'Quiet' years

Following on from 2024, when New Zealand didn’t register any significant natural disasters, Knight says 2025 was another quiet year.

With New Zealand reporting at least $120 million in total insured loss from severe weather, Knight says that’s a relatively benign year.

New Zealand normally tracks at somewhere between $200 million and $400 million in total insured damage per year.

“They were two pretty quiet years from a total loss perspective, obviously following the major 2023 events … where we had Cyclone Gabrielle and we had the Auckland anniversary floods.”

Knight says 2026 has already been a busy year with several extreme weather events across Aotearoa.

In January, heavy rain and floods affected places like Northland, the Coromandel Peninsula, Bay of Plenty, the East Coast and Tairāwhiti Gisborne. A landslide came down at the Beachside Holiday Park at Mt Maunganui, leading to the deaths of six people.

And in February, a storm system has been causing major disruption across New Zealand. The Bay of Plenty and Tairāwhiti Gisborne experienced flooding, Wellington experienced flooding and gales. Waikato was also hit with extreme weather, which led to flooding, slips and the death of a man after his vehicle became submerged.

Parts of Christchurch and Banks Peninsula have also experienced flooding, and several areas have been under states of emergency across Aotearoa.

Premiums and coverage

Knight says insurance premiums over the last four or five years have gone up about 40% to 50%.

“A big contributor to that is post-COVID level inflation that we’ve seen in pretty much everything - goods and services wise.

“So premiums have gone up an awful lot because of that inflation in everybody’s insured values. So properties have gone up, replacement costs have gone up and the value of people’s cars. Everything has gone up basically.”

He also pointed out how New Zealand was moving to more risk-based pricing.

“Some of the insurers have got access to or they’re starting to get more access to natural hazard risk information and data. So recent improvements and availability of these datasets has helped insurers to understand and make more informed risk-based decisions around natural hazards.”

Knight says the natural next step is to do more risk-based setting of at least the natural hazard component of an insurance premium.

“Basically … if you’re in a flood plain, your premium is going to reflect that. Or if you’re in a very high earthquake shake hazard area or liquefiable area in Wellington for example, your premium is going to reflect that.”

When it comes to the insurance coverage rate, Knight says it’s good in New Zealand as there’s also cover from the Natural Hazards Commission.

He did point out how insurers were re-evaluating their aggregate exposure.

“Now they’ve got this reasonable data telling them some insight, they’re now going ‘okay, I think we’re perhaps a bit oversubscribed in our risk aggregation in this particular area and so we’re not going to offer any new policies in that area for now'.”

This is what AA Insurance is doing - recently writing to customers and partners in the Westport region about temporarily pausing new home and landlord insurance policies in the 7825 postcode.

In February, AA Insurance head of underwriting Dee Naidu told interest.co.nz the decision reflects the elevated natural hazard risk of flooding in the area.

Naidu says it also reflects that AA Insurance’s; “exposure has reached a level where a pause on new policies is the most responsible step to ensure we can be there for our existing customers when they need us most.”

The 7825 postcode isn’t the only area where AA Insurance has put a temporary pause on new home and landlord policies. In April, the general insurer placed a temporary restriction on issuing new home insurance policies in Canterbury, with Naidu saying it had reached its maximum exposure limit for seismic risk in these areas.

Concerned about insurance being a major cost-of-living pressure for New Zealanders, the Government has launched a six-month review into home insurance affordability and costs.

And a Treasury document called Insurance affordability work options, released under the Official Information Act, says a range of factors have contributed to insurance price growth.

This includes insurer reassessments of seismic and climate-related risks, rising construction costs, significant catastrophic event losses, developments in global reinsurance markets and insurance availability in some regions have been reduced.

On the insurance review, Finance Minister Nicola Willis previously told 1News: "We know that the insurance industry has really good data about who's insured, how much it's costing, and we want to know what are they seeing in the trends of whether people are lessening their cover, how they're responding to those price increases, and what can we expect for the future.”

Knight says it’s an interesting review and it’s a reasonable time for the Government to do it.

Global findings

Aon’s climate and catastrophe report found global natural disasters in 2025 resulted in economic losses reaching at least US$260 billion (NZ$434 billion). In 2024, this was US$368 billion (NZ$648 billion).

Global insured losses reached at least US$127 billion (NZ$213 billion) which is 27% above the long-term average, the report says.

This is “a reminder that even in a below-average hazard year, the concentration and severity of certain events can reshape the global loss picture”, the report says.

The 2025 global insurance protection gap was the lowest on record, sitting at 51%. Last year’s report had it at 60%.

Aon defines the protection gap as the difference between total economic losses and what’s covered by insurance.

The report says this improvement was largely due to the concentration of losses in the US, “which accounted for 81% of global insured losses thanks to high insurance penetration”.

“Even so, more than half of economic losses worldwide remain uncovered, underscoring the persistent challenge of closing the gap in emerging markets.”

The most expensive global events were the Palisades and Eaton Fires in Los Angeles, causing at least US$58 billion (NZ$97 billion)  in economic losses and US$41 billion (NZ$68 billion) insured losses.

Réunion (part of the Mascarene Islands and east of Madagascar) and Jamaica recorded their costliest insurance events on record, the report says, and it was also the third-warmest year on record. 

There were 42,000 deaths, the report says, that were driven by earthquakes and heatwaves.

Physical and financial resilience

Knight says as we continue to see extreme weather events impact New Zealand; “and as our values and insured values are getting more valuable and we’re putting more of these assets in harm’s way, insured losses from these events will obviously continue to go up as a result”.

If we want to at least limit or reduce some of that growth in loss, “the only thing you can really target is long-term resilience of those assets to the extreme weather they’re facing”, Knight says.

The report says; “the contrast of subdued activity but elevated insured losses underscores a central theme of the year: Resilience must be both physical and financial”.

“Even when nature eases its grip, the impacts can be profound without strong infrastructure, robust risk transfer and the ability to absorb and recover from shocks.”

The report says to achieve resilience, organisations from the energy sector to construction, need to “understand where people, assets and operations are exposed today and under future scenarios”.

“Targeted investments in resilience will reduce damage, downtime and revenue loss."

“By quantifying the return on investment of mitigation measures and demonstrating credible risk reduction, organisations can fundamentally change how risk is financed to help unlock affordable insurance. Equally this is an opportunity for insurers to deploy capital and address unmet needs," the report says.

Knight says homeowners could have a look and see what they could do to make their property more resilient to extreme weather, especially when it comes to water - this could be making sure your roof, windows and gutter systems are watertight.

And from a government perspective, Knight says it could be about ensuring you have appropriate civil engineering, that drainage systems were up to scratch as well as flood protection.

Doing these types of things and improving resilience over time “should at least keep track with the growth and the value of our assets that we want to insure”, Knight says.