Insurers hit with thousands of claims as rains soak NZ

Major insurers operating in New Zealand including Insurance Australia Group and Suncorp Group have cumulatively received over 9,000 claims so far following severe storms and flooding in and around the biggest city, Auckland.

As of Monday morning, Suncorp's Vero and AA Insurance brands have received about 3,000 claims, while IAG's AMI, State and New Zealand Insurance brands have fielded over 5,000 claims.

Tower Ltd on Sunday said it had received over 1,000 claims since Friday, and noted losses were "substantial".

"This is a very significant event which will result in a lot of claims," according to The Insurance Council of New Zealand.

Insurance companies expect the number of claims to rise further in the coming days, as the situation continues to unfold and customers identify damages.

Four people have now lost their lives in the floods and landslips that have hit Auckland over the last three days and millions of dollars of damage has occurred. A state of emergency remains in place in the city of 1.6 million.

Auckland has experience record levels of rainfall since Friday and is expected to receive further heavy rain over the coming days, according to the city’s council.

The National Institute of Water and Atmospheric Research (NIWA) said in a tweet that Auckland has now recorded more than eight times its average January rainfall and 40% of its annual average rainfall.

On Monday, shares in NZ-listed Tower sunk 8.5% to NZ$0.650, its biggest single-day decline since March 17, 2020.

Shares of IAG dropped 5.9%, heading for its worst session in 15 months. Suncorp fell 2.8%, while peer QBE Insurance, which is yet to provide details on claims received, was down 2.9%.

IAG noted it was too early to determine the financial impact of the floods, and it may review the US$645 million (about RM2.7 billion) in natural peril costs it has estimated for fiscal year 2023, once the situation becomes clearer.

Suncorp said losses from this event will be capped at US$32.4 million as its reinsurance programme provides additional protection for New Zealand losses.

Citi in a research note observed that IAG's exposure to the floods in Auckland, which could be potentially as much as A$236 million, is "much greater" than Suncorp's NZ$50 million cap.