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New Zealand Recorded Minimal Insured Losses From Natural Disasters in 2024
While global natural disasters have cost insurers billions in 2024, New Zealand stayed relatively safe last year.
According to Aon’s latest Climate and Catastrophe Insights report, 2024 was the sixth-costliest year for insurers globally, reaching $368 billion in payouts. This was, in part, driven by Hurricanes Milton and Helene, severe convective storms in the U.S., and flooding across Europe.
However, New Zealand has dodged any significant natural disaster, providing relief for many Kiwis and their insurers. This marks a stark contrast from the nation’s 2023 catastrophic events, which saw two significant natural disasters—the Auckland Anniversary floods and Cyclone Gabrielle.
The global economic loss from natural disasters surpassed A$562 billion, recording a 10% jump from the annual average since 2000.
A quiet year
According to James Knight, head of Asia–Pacific for Aon New Zealand, 2024 was the country's third-quietest year for insured damage in the last 20 years.
“You have to look back all the way to 2012 to find a quieter year in terms of total loss. And that's directly following the 2011 Canterbury earthquake sequence,” he said.
Knight states that 2024 was an “outlier” year in terms of the total insured loss from natural hazard events. This, however, is in relation to the insured losses in 2020, 2021 and 2022, which Knight said had also reported “pretty high” natural hazard activity.
Between 2020 and 2022, New Zealand experienced higher-than-long-term average total insured losses, amounting to about $300 million to $400 million each year. Treasury estimated that these events had cost the economy between $9 billion and $14.5 billion. Additionally, the Insurance Council of New Zealand (ICNZ) said that insurers have paid out over 118,000 private insurance claims of around $3.8 billion.
According to Knight, New Zealand’s insured damages typically total between $200 million and $300 million annually.
Looking ahead
Knight states that the numbers might return to normalcy following catastrophes in the last few years. This is welcomed news for all parties involved – insurers and the insured.
“Moving forward after 2025, I do expect it to return back to that kind of mid-range of $200 million to $300 million per year,” he said. “It's just that we've had a particularly quiet year last year. We've had a pretty high last five to 10 years,” he said.
Knight also mentions that weather conditions may be favourable this year and much more settled. This is due to the positive indication of New Zealand’s climate driver, the Southern Annular Mode (SAM), which has influence over rainfall.
“And the outlook for autumn from NIWA is much the same, which is good. So that tends to mean more easterly winds across NZ and so you get less rainfall on the west coast, maybe a little bit more rain on the east coast, but not, not massive. So, I don't expect to see anything above average in terms of loss expectations for this year,” he said.
Factors affecting insurance costs
Insurance costs will remain elevated across the country. Knight believes this is due to global inflation and supply chain constraints and is similar to other goods and services in the country.
“As with other products and services, insurance premiums remain high following significant global inflation in recent years … Given the high cost of insurance is unlikely to improve in the short term, it is vital to continue to focus on improving the resilience of homes and businesses to reduce some of the vulnerability in built environments,” Knight said.
Meanwhile, businesses and customers can be encouraged by New Zealand's high insurance coverage rate. This is due to the country's Natural Hazards Commission, which provides natural disaster insurance to residential property owners.
“That cover has been fantastic for this country, and we're very lucky to have that, and it's a bit unique,” he said.
Knight expects insurance premiums to be predominantly driven by how and where people insure rather than extreme weather conditions - especially over the next 10 years.
“From an affordability perspective, we're not seeing mass unaffordability problems at the moment,” he said.
Key takeaway
The lower numbers for insured damages are a positive sign for businesses in the year ahead. It marks a good time to expand and grow while securing the business from unwanted natural disasters. Implementing preventative measures, such as business insurance, can go a long way in providing business owners peace of mind and stability.
Bonded NZ helps business owners remain efficient in economic uncertainties through comprehensive and tailored business insurance. Whether it's public liability or professional indemnity insurance, our cost-effective options help them secure their business at every angle.
For more information about our services, contact our team today.