Reinsurance News

Suncorp warns New Zealand floods could trigger its reinsurance

30th January 2023 - Author: Kane Wells

Suncorp has warned that the flooding currently affecting Auckland and the North Island in New Zealand could trigger its reinsurance cover.

suncorp-logoAt least 4 people have died with around 350 needing replacement accommodation as a state of emergency order continues.

Residents in the affected areas have been told by authorities to brace for more severe weather alerts in the coming week.

Speaking to various sources, New Zealand’s prime minister Chris Hipkins said, “It’s a 1-in-100-year weather event, and we seem to be getting a lot of them at the moment.

“I think people can see that there’s a message in that…Climate change is real, it’s with us. We are going to have to deal with more of these extreme weather events in the future.

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“We need to be prepared for that. And we need to do everything we can to combat the challenge of climate change.”

Suncorp has reported that 3,000 claims have been received across the Vero and AA Insurance brands as of the 30th of January.

The firm anticipates this to increase as customers return to their homes and as commercial claims are lodged via brokers.

Suncorp’s comprehensive reinsurance program provides additional protection for New Zealand losses. This means losses from this event will be capped at NZ$50 million, net of reinsurance cover.

Suncorp Group CEO, Steve Johnston, suggested that the full extent of the damage would take some time to determine.

He added, “We are aware more rain is expected in the following days, and that there are reports of damage beyond Auckland. Our thoughts are with our New Zealand customers in these difficult times. We encourage them to lodge their claims as soon as it is safe to do so.

“The Suncorp New Zealand team is already on the ground in the affected areas providing support and assistance. Claims management resources from the Group’s Australian insurance operations will also be deployed to speed up the claims process.”

Meanwhile, IAG has said that the event could cause it to revise its catastrophe budget for the year.

IAG stated that it has extensive reinsurance arrangements in place for natural peril catastrophe events. As announced on 10 January 2023, in conjunction with IAG’s Whole of Account Quota Share arrangements, the combination of all catastrophe covers at 1 January 2023 results in IAG having a maximum event retention of $236 million.

IAG Managing Director and CEO, Nick Hawkins, noted IAG’s priority is the safety of its customers and communities.

He added, “The tragic loss of life and the vision of the damage to Auckland is devastating. Our Major Event Response team has been supporting customers since Friday night, with temporary accommodation and other emergency support.

“We have a large team ready to help people with their claims and we will have our assessors on the ground in affected areas as soon as it is safe to do so.”

New Zealand-based insurance company Tower Limited has received approximately 1,900 claims from the floods so far. Of these, around 1,000 are house claims and the remainder are motor and contents claims.

Tower has robust reinsurance arrangements with multiple treaties in place that cover house, contents and motor losses, in addition to providing $934m of catastrophe cover.

The catastrophe cover has an excess of $11.85m which is within the $30m Tower has allowed for large events in FY23.

Tower CEO, Blair Turnbull, noted that the firm is focused on supporting affected customers and communities and is utilising extra resourcing from its teams in Auckland, Rotorua and Suva to assist customers.

He added, “Tower is well prepared to respond to such large-scale events and is in a strong position to support the recovery.

“We are proactively communicating with our customers via text message and email, we have bolstered resourcing in our contact centres and have assessors on the ground.”

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