Insurance losses for extreme weather events

  • Image, Extreme weather events.

    Extreme weather events are weather events that are rare or even statistically unlikely. In New Zealand, such events can be dangerous and costly, both socially and monetarily. They can cause damage that affects productivity and leads to millions of dollars in insurance claims.

    We classified Insurance losses from extreme weather events as supporting information.

    Key findings

    In 2014, Insurance Council of New Zealand (ICNZ) data showed the total insurance cost for eight extreme weather events was $145.79 million.

    • The largest insurance cost from extreme weather events was $122 million ($140.06 inflation-adjusted) in 2014.
    • The largest number of extreme weather events identified by ICNZ in a single year was 10, in 1997.
    • Two examples of a costly extreme weather event are (figures are inflation-adjusted):
      • the 2004 storm damage in the southern North Island, which cost insurance companies $140.06 million

      • the 1984 floods in Invercargill, which cost insurance companies $139.51 million.

    Definition and methodology

    The Insurance Council of New Zealand (ICNZ) collects data on natural disasters in New Zealand. This includes, but is not restricted to, the occurrence and costs of selected expensive extreme weather events. Floods, tornadoes, and snowstorms are a few examples of extreme weather events. However, some events can be severe (eg damaging storms) but not statistically extreme. We included only events from the ICNZ dataset where a weather event is noted.

    When ICNZ considers a natural disaster event extreme enough, it requests information on insurance losses from its member insurance companies. Alternatively, members may prompt the ICNZ to record data on a natural disaster event. The ICNZ requires all its members to provide their insurance losses for that event.

    The main insurance classes affected are domestic home and contents, commercial material damage, and business interruption. ICNZ also provides data adjusted for inflation but using the consumers price index only. Insurance losses can also be influenced by other factors, such as the extent of insurance cover.

    These data represent only the insurance costs – the total costs of events will be much larger.

    Data quality

    We classified Insurance losses from extreme weather events as supporting information.

    Relevance

       This supporting information is an indirect measure of ‘Climate’ topic.

    Accuracy

       The accuracy of the data source is of medium quality.

    See Data quality information for more detail.

    Archived pages

    See Insurance losses from extreme weather events (archived October 2017).

     

    Updated 19 October 2017

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