New Zealand Insurers: Weather Claims Surge and Call for Adaptation

Vero, IAG, and Tower Insurance reported that costs for weather-related claims have skyrocketed in the recent financial years, prompting a direct warning to the incoming New Zealand government. The insurers argue that the current lack of a coordinated national strategy for climate adaptation is driving up premiums and straining the sector. They are urging immediate action to address gaps in infrastructure and risk management before costs become unmanageable.

Vero, underwritten by Suncorp, disclosed that weather-related natural hazard claims reached $185 million in the year ending June 30. This figure represents a tripling of the $70 million recorded in the previous year, a period marked by fewer major weather events. IAG, which underwrites AMI and State, saw its own weather-related claims rise from $132 million to $322 million over the same period. The company attributed the increase to 44 separate weather events, including damaging wind storms in Southland in October 2025 and extreme rainfall in the Bay of Plenty in January that caused the fatal Mauao landslide.

Tower Insurance, currently in a blackout period ahead of its annual results release on November 26, provided preliminary figures in a guidance update. Large event claims costs totaled approximately $25 million in the year to September 30. This was a sharp increase from $7.2 million in the prior year. A spokesperson noted that the previous fiscal year's costs were unusually low and sat well below the company's historical 10-year average, suggesting the recent spike reflects a return to or exceedance of typical trends.

The insurers project that these costs will continue to climb. Vero estimates that natural hazard claims for weather-related events will rise by 12 to 15 percent by 2040. The company expects the increase to reach 21 to 27 percent by 2050. Suncorp executive officer Tom Hinds stated that addressing these climate-related risks is essential for managing reinsurance costs and keeping insurance accessible. He emphasized that long-term affordability requires coordinated national investment in climate adaptation and resilient infrastructure, rather than isolated business adjustments.

This financial pressure aligns with earlier criticisms from IAG regarding government policy. In a report released earlier this year, IAG described successive governments' adaptation approaches as ad hoc and piecemeal. The company identified a lack of national planning for risk reduction, cost sharing, and community relocation. IAG chief executive Phil Gibson told RNZ on Wednesday that natural hazards have imposed at least $64 billion in direct costs on government, councils, insurers, and communities over the last 15 years. He noted that approximately 95 percent of that spending went toward response and recovery, leaving only a small fraction for reducing future risk. Gibson urged the new government to implement the practical 15-year roadmap outlined in the report to close identified gaps in hazard management.