Insurance Professionals Urged to Prepare Clients for Extreme Weather Events
Insurance professionals across New Zealand are being advised to take a more active role in preparing clients for extreme weather events, as insurers and regulators report rising claims and increasing consumer confusion about insurance responsibilities and coverage. Following a series of storms and flooding incidents across the country – including damage in Wellington and the South Island – the Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) has released fresh recommendations to assist policyholders in reducing the risk of declined or delayed claims.
Claims Process Following Extreme Weather Event
Karen Stevens, Insurance & Financial Services ombudsman, emphasized the critical nature of the period immediately after a weather event for proper documentation and communication. “The first thing to remember is to only start dealing with the clean up when it’s safe to do so. Then, when it’s safe, make sure you document everything before starting on the clean-up. Take photos or videos of the damage and make a detailed list of affected items. Without proof – like photos or receipts – insurers can decline claims. A list on its own often won’t be enough,” she said.
According to Stevens, policyholders sometimes rush to clean up or remove damaged goods – such as carpets, furniture, or debris – believing it’s necessary. But if these actions are taken without insurer approval, claims could be negatively affected. “You are expected to do essential repairs to prevent further loss, but you should only do this after talking to your insurer, as insurers and homeowners don’t always agree on what counts as essential,” she explained.
Importance of Insurance Policy Education
Stevens also stressed the importance of understanding policy details. Brokers should ensure clients know whether their home insurance is based on full replacement or a fixed sum insured, and whether contents are covered for actual replacement value or depreciated value. The same goes for vehicles – market value versus agreed value can lead to very different outcomes after a weather event.
Recent claims data from AMI, State, and NZI reveal the scale of current pressures. The three brands reported a combined total of 3,536 claims from 14 significant natural events during spring and summer 2024. This included 908 claims following the Dunedin floods in October and 373 from the Northland Anniversary storm. Additional claims – over 2,000 in number – arose from ex-Tropical Cyclone Tam, impacting home, motor, and commercial policies.
Amanda Whiting, CEO of AMI, State, and NZI, noted that beyond physical damage, many clients experience emotional and psychological strain during these events. “As we respond to these events, our customers often tell us about the psychological and emotional impact of wild weather and the effect of being displaced or losing their home on their well-being. These impacts can last far longer than physical damage and raise concerns about the ongoing well-being of affected communities,” she said.
Survey results from the insurers’ Wild Weather Tracker support this concern. More than half of respondents said they had experienced a natural hazard in the past two years, and 43% cited flooding as a major fear. Earthquake risk was also prominent, noted by 50% of participants. Meanwhile, figures from the Natural Hazards Commission (Toka Tū Ake) show an upward trend in homeowner resilience measures. A recent survey conducted with NielsenIQ found 71% of respondents had taken steps to strengthen their homes – up 15 percentage points from the prior year.
