A new climate report forecasts an 80% chance for New Zealand to transition to El Niño by August, more than twice the normal likelihood for the trend.
Aon’s 2023 Weather, Climate, and Catastrophe Report: Asia Pacific Insights projected that the shift from pervasive La Niña in winter will bring about more southerly winds, causing colder temperatures across the country and an increased likelihood of high fire-danger weather days. El Niño is also known for its lower-than-average rainfall, which brings about concerns regarding water availability.
This new forecast puts recent climate events in a spotlight; 2023 was a record year for insured losses, the second highest in the country’s history behind 2011, the year of the Canterbury earthquakes. Both the Auckland floods and Cyclone Gabrielle are already expected to generate total insured losses of more than NZ$2 billion each.
2022 was also an above-average loss year of New Zealand, driven by flood and storm losses that comprised 79% of industry-reported declines worth approximately NZ$263.77 million. Last year was also the fifth highest for insured losses at NZ$335.59 million.
Aon New Zealand analyst James Knight said that 2022 also revealed a substantial protection gap for insurance, with the figure sitting at 86%.
“While weather-related perils have the potential to generate significant insurance losses, which 2023 has already shown, earthquakes hold clear dominance as New Zealand’s most expensive peril, both in terms of observed loss and future loss potential,” Knight said. “For example, the Canterbury Earthquake Sequence delivered a total insured loss of approximately NZD 38 billion. The total insured loss from this event is by far the largest for the industry in the southern hemisphere, eclipsing the record-breaking Australian southeast Queensland and New South Wales floods from March 2022 that are currently sitting at approximately AUD 6 billion.”
Elsewhere in the firm, Aon recently launched its new pricing platform, a software solution that aims to provide insurance companies an edge through better risk selection and meaningful analytics.
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