Floods in New Zealand’s Otago, Southland, Northland and Coromandel regions are likely to mean only modest insurance losses but the Insurance Council of New Zealand (ICNZ) says the consistent weather extremes should act as a warning.

It estimates claims for the Otago flood are likely to total about $NZ3 million ($2.5 million), and it expects flooding in the North Island to leave a similar damage bill.

ICNZ President Rieny Marck told Sunrise Exchange News insurance payouts for severe storms and flooding have increased markedly in the past 20 years, and there is no reason why this winter should be any different.

Mr Marck, who is also CEO of Lumley General Insurance in NZ, said yesterday that the recent spate of flooding in the North Island is a clear indication of climate change.

“Our research shows storms and accompanying floods are increasing in frequency and intensity,” he said. “The consequential economic, insured and uninsured losses, and trauma are causing growing concern to the NZ community and economy.”

He says the situation is even more frightening when you consider that 25% of NZ homeowners are not insured. Underinsurance and non-insurance are big issues in NZ, with up to 40% of households in some rural communities affected.

“Without insurance, winter flooding will spell disaster for uninsured families and unprepared communities,” Mr Marck said. “We have no evidence to suggest this winter will be any better.”

He says ICNZ statistics show the severe effect global warming has had on the country. In 1968 there was one big storm, and it was seven years before a storm of equal intensity struck.

However, from 1983 to 1986 there were 15 big floods, each costing insurers from $NZ800,000 ($670,000) to $NZ13 million ($10.8 million). Over the following nine years, 69 weather events inflicted damage across both islands, and since then insurers have paid out more than $NZ1.6 billion ($1.3 billion) just to homeowners.

Mr Marck says the industry needs to develop greater understanding of the cause of floods and their effect on communities. It must identify the best ways of managing and preferably avoiding disasters.

“Ensuring adequate insurance protection is a critical part of achieving greater financial security and continuity,” he said.