New Zealand-based insurance company Tower Limited anticipates the flooding that affected Auckland and parts of the upper North Island will trigger its reinsurance cover for catastrophe events.
Tower CFO Paul Johnston says that the firm’s robust reinsurance arrangements have multiple levels of cover in place and provide the business with protection from the volatility of large events. Tower’s reinsurance arrangements cover house, contents and motor losses, in addition to providing $934m of catastrophe cover.
Johnston commented, “We are continuing to assess the financial impact of this event. At this early stage, we expect it will trigger Tower’s reinsurance cover for catastrophe events.
“The excess for catastrophe events is $11.875m which is well within the $30m Tower has allowed for large events in FY23. As this event spanned several days and was part of the same weather system, it is considered to be one event, therefore only one excess will be paid.
“In line with Tower’s comprehensive approach to reinsurance, it is likely we will purchase reinstatement cover to ensure we retain our full levels of catastrophe protection, with the costs for this being absorbed within the financial year.”
Tower disclosed that its customers have lodged 4,810 policy claims thus far, 2,660 of which are for home insurance, while around 740 are for the motor with the balance mostly being contents insurance claims.
Claims predominantly relate to damage caused by flooding with some related to landslides.
Tower states that its immediate focus as the event commenced was to enable customers to lodge claims quickly online and through its contact centres in New Zealand and Fiji.
The firm notes that while the number of claims has slowed significantly, it still expects to receive more.
Tower CEO, Blair Turnbull, suggests that Tower remains financially strong with robust reinsurance cover and a well-capitalised balance sheet.
Turnbull added, “Tower has the operational resilience to process and manage surges in claim volumes without adversely impacting normal business operations.
“Tower continues to invest in sophisticated underwriting capabilities and risk-based pricing which enhance our rating agility and accuracy and help to deliver sustainable margins.”
In related news, Suncorp also recently warned that the flooding could trigger its reinsurance cover, while IAG said that the event could cause it to revise its catastrophe budget for the year.