Climate changes causing more wild weather means the New Zealand insurance industry must gear up and adapt to minimise economic loss and social disruption, the Insurance Council of New Zealand has warned.
Brokers must think long-term – not just the scope of a 12-month policy – and help clients put plans in place in order to get a better deal from their insurer, says ICNZ chief executive, Tim Grafton.
The advice comes after figures were released last week showing weather-related damage causing more than $174 million of insured costs, made 2013 the second most expensive year since 1968.
The cost of insured damage in 2013 was exceeded only by 2004 when there was $181 million worth of insurance damage (inflation adjusted as at 2011). 1984 was another expensive year with $155 million worth of insured damage.
Grafton said numerous reports, including from the Met Service, Niwa, the Sir Peter Gluckman report and the government panel on climate change, indicate New Zealand will get more westerlies and storms and more rain over the next 20-30 years.
“The more growing awareness there is of the longer term among the business community the better,” said Grafton. “But in the short term a broker can certainly go to a client and say we need to put a business contingency plan in place to show their insurer and that way they will be more receptive in terms of the premium.”
If a business is based in a flood-prone area and the company has previously put claims in to their insurer, for example, the broker can advise clients to put a contingency plan in place that shows they can still function, even in a severe flood perhaps, by demonstrating they can move stock without it getting damaged.
“Those are the kinds of initiatives a broker could take in terms of steps taken to address risks and the insurer may be receptive to that which could possibly affect the premium outcome,” said Grafton.
The storm that wreaked the most havoc in 2013 hit 11-12 September with $74.5 million of insured losses making that alone the third most expensive storm event in the past 45 years.
Commercial losses from that storm were significant with $42 million worth of damage to commercial property and a further $3.1 million in business interruption payments.
Domestic-related losses amounted to $18 million and damage to motor vehicles amounted to $9.5 million.
“This further reinforces the value of insurance in safeguarding New Zealand by being able to meet costs of this scale,” Grafton said.
