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Extreme weather costs NZ insurers $178 million in year to June

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The Insurance Council of New Zealand (ICNZ) says extreme weather claims cost the industry $NZ198 million ($178.07 million) in the year to June.

Final claims for floods in late March totalled $NZ119.6 million ($107.53 million) while preliminary data for storms in mid-June $NZ15.5 million ($13.94 million).

"Communities are once again enduring a hard year,” ICNZ CEO Tim Grafton said. "While we can’t say for sure that we’ll see a new record for extreme weather claims in 2022, we are seeing a steadily rising trend in climate related insurance costs.”

Last year set a payment record of $NZ324 million ($291.3 million). ICNZ says the trend is putting a strain on “insurers and householders alike”.

More frequent and severe extreme weather events, coupled with soaring building costs and ongoing supply chain constraints, are adding to premiums, it says, as is the rising cost of reinsurance as global reinsurers themselves see record climate-related losses.

“All of this flows through into premiums,” ICNZ said. "Insurance only transfers risk, it doesn’t reduce it.”

Communities should act now through local and central government to build resilience to local risks such as flooding, sea level rise, drought or wildfires, it says.

"Investment is needed in natural and man-made measurers in order to keep risks at a level where insurance is affordable for both homeowners and insurers alike over the medium to long term … as the current trend of intensifying extreme events continues,” Mr Grafton said.

The fiscal 2021 total figure excludes $NZ6 million ($5.39 million) from January’s tsunami following the Tongan volcanic eruption.

Preliminary July claims are set to be reported in late August.