Insurers heave under spate of claims

In addition to Kaikoura, Debbie and Ports Hills, insurers must now contend with the aftermath of Cyclone Cook

Insurers heave under spate of claims

Insurance News


After a flurry of natural disasters, reports of hard-hitting Cyclone Cook following hot on the heels of Cyclone Debbie and wreaking havoc on property, cars, trees and power lines with gusts of up to 210kmh and waves reaching six metres high were too much for many to digest.

The MetService’s sizing of Cyclone Cook’s power saw it as the most tightly packed cyclone since 1968.

Cyclone Cook left its mark on the Bay of Plenty, streaming 200mm of rainfall on one Thursday night alone. Even though it missed North Island’s biggest cities, the cyclone left a trail of destruction across the island’s eastern regions before slamming into a southerly front around Cook Strait, resulting in the formation of strong winds – but nothing compared to Giselle – before heading for South Island where it most notably flooded Christchurch roads and caused the Heathcote River to burst its banks.

As to the cost to business of Cyclone Cook, the Insurance Council of New Zealand (ICNZ) CEO Tim Grafton says it is too early to provide estimates but that insured losses will run into the tens of millions of dollars.

“The events have happened in different parts of the country and insurers have dedicated teams focused on these separate events utilising local loss adjusting expertise,” he says.

“Insurers are meeting the challenges they face.”

Willis Towers Watson New Zealand CEO Peter Lowe says the company has a claims centre of excellence that handles all its clients’ claims issues.

Want the latest insurance industry news first? Sign up for our completely free newsletter service now.

“The volume of claims has increased; we have very effective systems and processes in place to ensure our clients claims are treated promptly and fairly,” he says.

Myles Noble, head of insurer relationships and broker claims at ‎Crombie Lockwood, says that even though the company is finding the claims volumes challenging, its centralised claims model deals well with natural disasters and micro disasters.

“What has been more challenging is that these recent events have occurred so relatively soon after the Kaikoura earthquake - so the biggest hurdle has been securing loss adjuster resources for the recent weather events given their geographical spread,” he says.

Margaret Wallace, chartered loss adjuster and director of Crawford & Company, says staff members have worked long hours to help clear the backlog of claims.

“We have been incredibly busy,” she says. “Fortunately, we have invested in updating our IT platform in recent years and by using our technology we are able to quickly send reports on small to medium-size losses to insurers and provide them with reserves on a timely basis.”

Darryl Cowan, chief executive officer of Cunningham Lindsey, confirms that “loss adjusting resources across the industry have been stretched as a result of the series of storms that have come through in the last few weeks.”

Meanwhile, AA Insurance customer relations manager Amelia Macandrew says that Cyclone Debbie and now Cyclone Cook have caused a big surge in insurance claims.

“Cyclone Debbie kept our claims team busy and we’ve received almost 400 claims related to storm and flooding damage,” she says. “Since the Wednesday prior to Easter, we’ve also received over 130 claims related to Cyclone Cook. Claims poured in from throughout the country, but the majority were centred on Auckland’s North Shore. We expect more claims to filter in as customers have a chance to assess the damage.”

The most common damage reported to AA Insurance includes water seeping into basements and garages, as well as frozen food claims after power cuts. However, Macandrew points out that there have been a small number of claims incurring moderate damage, such as a tree that has fallen on to one customer’s house, as well as several flooded cars and a few minor landslips.

Suncorp says it is too early to calculate the cost of Cyclone Cook but that it has already received more than 1,000 claims (including 64 for commercial property and four for business interruption amounting to over $500,000) for Cyclone Debbie at a cost of about $8m.

As to the wildfires that swept over the Port Hills of Christchurch in February, the cost to insurers is $17.7 million, according to the ICNZ. Provisional data released on April 13, also shows that $10.2 million is for house and contents, $7.3 million is related to business insurance and $165,000 for motor vehicle loss.

And while the insurance industry can sigh with relief at the probable end to tropical cyclones, the winter months herald the likelihood of southerly storms.
Author: Nerine Zoio

Related stories:
NZ insurance industry unfazed by Cyclone Debbie
Flood alert for people on North Island

Keep up with the latest news and events

Join our mailing list, it’s free!