New Zealand insurance industry faces growing threat from secondary perils
New Zealand insurance industry faces growing threat from secondary perils | Insurance Business New Zealand
Catastrophe & Flood
New Zealand insurance industry faces growing threat from secondary perils
Brokerage giant outlines new priorities of insurance companies and policyholders
Catastrophe & Flood
By
Roxanne Libatique
The year 2023 marked a turning point for the global insurance industry, with insured losses breaching the US$100 billion mark without the push from a singular, catastrophic event, according to Gallagher’s market update.
The spotlight has now turned towards secondary perils, which, though less dramatic than primary disasters like earthquakes and cyclones, are contributing significantly to the industry’s risk portfolio.
New Zealand insurers focus on secondary perils
Gallagher – which recently released its annual insurer survey report that offers a comprehensive look at the upcoming challenges and areas of focus for the New Zealand insurance industry – said the New Zealand insurance industry is adapting to the new landscape, with floods (a typical example of a secondary peril) coming under increased scrutiny.
Traditional risk assessment models have primarily focused on primary perils, leaving a gap in understanding the full impact of secondary threats. This oversight is now being addressed as insurers and reinsurers alike pivot towards a more comprehensive evaluation of risks, including those posed by floods.
New Zealand’s insurance trends in 2024
2024 is set to be a pivotal year for property insurance policies in New Zealand, with a renewed focus on assessing flood risk profiles at the time of policy renewal.
Gallagher noted that insurers, which may have previously concentrated on properties in well-known flood-prone zones, are now utilising broader data sets, including local council flood maps, to reassess risk across a wider array of properties. This shift acknowledges that flood risk is not confined to traditional high-risk areas and that property-specific mitigation efforts are critical factors in risk assessment.
For policyholders, the evolving approach to flood risk signifies the importance of transparency and communication with insurers. Providing detailed information about any flood risks and mitigation measures is crucial to securing appropriate coverage. Failure to do so could result in insurers imposing higher deductibles for flood damage or, in more severe cases, limiting or excluding flood coverage altogether.
This recalibration towards secondary perils highlights a broader change in the industry’s approach to risk management, signalling that the impact of these seemingly lesser threats can no longer be overlooked.
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