Vero New Zealand predicts extreme weather losses will rise 26% by 2050 under current government climate policies.

The Suncorp-owned insurer’s Climate Change Scenario Analysis points to coastal inundation and intense flooding, particularly on the South Island, as the main driver of losses.

It predicts most coastal inundation losses will stem from damage to about 1.5% of current coastal homes, while less than 2% of inland properties will account for 30% of projected flood losses.  

It warns population growth in high-risk areas, without proper land use planning, could heighten these risks.  

“If left unaddressed, the rising risks will lead to increased costs for all insurers, including higher claims and reinsurance, which in turn may affect the cost and availability of insurance cover,” Suncorp executive officer Tom Hinds said.

“Adaptation measures like improved hazard mitigation and increased investment in resilience will be essential strategies to help reduce the risk to these communities.”  

The insurer estimates that under the current “hot house” trajectory – in which post-industrial global temperatures rise 3 degrees by 2050 – New Zealand is likely to suffer severe food price rises, worsening water and power supply problems, and withdrawal of reinsurance in parts of the country.  

By contrast, an “orderly” transition to net zero emissions by 2050 would mean average annual losses increase by 19%.  

A delayed transition to net zero, with more than 2 degrees of warming, would bring disruptive energy price rises, a smaller reinsurer withdrawal, and heightened inflationary pressures from stronger weather events.  

The findings are part of Vero’s second Climate-Related Disclosures Report, which outlines its work with Suncorp to finalise its climate transition plan and meet targets and commitments.

Vero says it has reduced its direct and indirect emissions by 60% since 2020 and aims to achieve net zero by 2030.  

See the full report here.