Suncorp New Zealand CEO Jimmy Higgins has underscored the importance of a comprehensive national strategy to address natural hazard risks.
Speaking to Interest.co.nz, the executive emphasised that such measures are necessary to restore global reinsurers’ confidence in New Zealand.
Higgins said recent disasters like the Auckland Anniversary floods and Cyclone Gabrielle have led to a more cautious stance from reinsurers, with an increased demand for higher deductibles from local insurers.
He said that reinsurers were unprepared for the scale of these events, which deviated significantly from their models.
“They never expected the losses from a flood in Auckland. It was never in their models, and they never expected a cyclone of the level that we saw in the Hawke’s Bay region,” he told Interest.co.nz.
During the 2024 financial year, Suncorp NZ paid out $1.2 billion in claims, including approximately $600 million for property-related losses and $400 million for vehicle claims. The company had allocated $1.36 billion for natural hazards, with actual costs coming in $125 million under budget.
Suncorp’s projections indicate that surface flooding losses could rise by 20% by 2030 and by 50% by 2050.
In July, Suncorp Group CEO Steve Johnston unveiled changes to the company’s placement of its FY25 reinsurance program, aiming to balance costs, earnings, and capital volatility while ensuring adequate returns.
Higgins said that for the reinsurance market to regain its previous appetite, New Zealand must show progress in understanding and mitigating natural hazard risks.
“Is the maintenance of that infrastructure appropriate?” he said. “Are we clearing gutters [and] stormwater systems? How are we dealing with those areas that we know are more exposed to surface flooding?”
Earlier in the year, Higgins called for enhanced central coordination on climate adaptation. This call was partly addressed in May when Climate Change Minister Simon Watts directed the Finance and Expenditure Committee to develop a framework for managing the risks and costs associated with future extreme weather events.
New Zealanders are also calling for bold action on climate risks amid increasing severity and frequency of climate-related events in the country. A recent survey revealed that 65% of New Zealanders believe that the country should direct more resources towards mitigating these risks.
The Climate Change Commission has also joined calls for improved measures to mitigate climate risks after finding that the country’s current efforts to address the impacts of climate change are inadequate.
