A long run of major rainstorms striking outside New Zealand’s major cities was a “matter of luck,” and came to an abrupt end when Auckland’s 1.66 million residents were inundated in the nation’s worst-ever weather event.

Moody’s RMS Director Steffi Uhlemann-Elmer says it will “certainly by far exceed the losses of any previous severe weather events, set new records for the number of claims reported, and deliver significant payouts for commercial coverages and business interruption”.

The catastrophe “highlights the material risk of flooding in New Zealand,” she said.

A record of more than 250mm of rain lashed Auckland and surrounds in unprecedented flooding on January 27. Analysts at Jarden estimate insured losses of $NZ900 million ($821 million) are possible, according to local media.

While “physically plausible,” no major rainstorm had previously hit key exposure areas such as Auckland, Wellington or Christchurch, despite “some close calls,” Ms Uhlemann-Elmer said, and no single event passed NZ$100 million ($91.35 million) in insured losses.

“When looking into the meteorology and physics of flooding it becomes clear that this was more a matter of luck. Canterbury had a narrow escape in 2021; if the rain had moved just a few kilometers further north, the city would have been drenched.”

January was New Zealand’s wettest ever month, and Auckland Mayor Wayne Brown extended a State of Emergency, saying the flood was "like none of us has ever seen before”.

“Severe damage has occurred in all parts of our region. The downpour was by far the biggest in Auckland’s history. It was well beyond what even our emergency people had imagined or planned for,” he said.

Shares in IAG shed 6.5% in five days as the insurer received more than 15,000 claims and estimated gross costs from the Auckland floods will top $350 million.

It cut its full-year margin to 10%, from an anticipated 14-16% and revised its annual natural perils forecast to $1.145 billion, from $909 million set in mid 2022. IAG’s natural perils costs reached $1.12 billion the previous year, blowing its $765 million allowance.

“The Auckland event, combined with the escalation in supply chain inflation, has delayed … operational progress,” CEO Nick Hawkins said.

New Zealand’s broking community burst into action, reviving skills they honed when North Island towns such as Kumeu were flooded in recent years.

“It’s Groundhog Day but on a bigger scale, with more volume of claims because it's Auckland-wide,” Primesure Brokers MD Cameron Hollis told insuranceNEWS.com.au. "You guys in Australia have had some pretty mean floods. It's just clean up now, as you well know.”

Brokers say unlike in Australia, insurance policies in New Zealand exclude very little, including flood.

The team at Primesure has managed several multi-million-dollar claims, with some manufacturing clients such as a woodwork firm and a kitchen and cabinetry supplier hard hit and likely to struggle to get replacement machinery.

It is encouraging insurers to accept quotes from trades and clients to speed settlement.

"The people that they use all the time are not going to have the resource to do it,” Mr Hollis said. “Our sparkies and plumbers are making safe and taking photos and then submitting invoices and quotes so it doesn’t need the assessors coming out.”

Godfrey Chartered Loss Adjusters Principal Consultant Business Interruption Chris Thom tells insuranceNEWS.com.au his firm has responded quickly and sent property adjusters to affected areas, while Event Cover Underwriting Manager Stu Hartley says a number of events in North Island regions have been impacted.

"The word unprecedented has been bandied around but it really is the worst flooding we've ever seen in Auckland. The damage that's caused to some communities here is probably irreparable,” Mr Hartley said.

According to preliminary damage information from Auckland Emergency Management, more than 19,000 properties in Auckland – where average home prices rival Sydney values – were on Thursday confirmed as damaged. This is expected to rise as assessments are completed.

Auckland-based Vero Insurance EM Business Nick Meister – who has just completed his first month in the role – says business and corporate claims are coming “steadily through”, some with significant reserves as commercial areas were impacted by flooding.

Vero expects stock, building plant and business interruption claims, and says repair costs could be significant for some of customers' buildings and contents.

Mr Meister says it could “take many months for some repairs to be done and claims to be settled”.

Insurance Council of New Zealand (ICNZ) Consumer Affairs Manager Sarah Knox was quoted in local media saying a standard flood event would take a year to settle 90% of claims, and this large-scale event will “take a long time”.

"We're talking months and years. This is an unprecedented event in terms of New Zealand's history for a flood event."

Ms Uhlemann-Elmer says accumulated loss-causing events had already led to changes in the insurance market in how to appropriately price for flood, and the latest flood had clarified "the materiality of the risk”.

“(Past) loss experience told the story about flood claims occurring frequently but individual event losses and annual accumulations have kept within expectations,” she said.