New Zealand insurers have urged consumers to check their cover after a Lloyd’s study showed the country has the second-highest exposure to natural catastrophe losses.

Annual expected natural disaster losses are about 0.66% of GDP, higher than Japan and many less developed Asian economies in the top10 list, and behind only Bangladesh.

“This report shows how risky New Zealand really is,” Insurance Council of New Zealand CEO Tim Grafton said. “As a risky country, it’s important that we remain well insured.

“That means not only ensuring we insure our assets, but making sure coverage of those assets is sufficient to replace them.”

Chile is third (0.65% of GDP) on the list, followed by China (0.49%), Vietnam (0.48%), Indonesia (0.43%) and Thailand (0.42%).

Turkey is eighth (0.38%), the Philippines ninth (0.34%) and Japan 10th (0.29%).

Director at property risk assessor Residential Risk Analysis Melissa Heath says many policyholders do not fully understand the policies they have bought.

She tells insuranceNEWS.com.au the 2016 Kaikoura earthquake revealed a “breathtaking” level of underinsurance.

The quake was the first major event since New Zealand moved to a sum-insured policy regime. “My personal experience [suggested] at least 30% of homes were underinsured for that event.

“In my current role, I find that underinsurance is ongoing, with policyholders completely unaware of what their policies cover them for – and, more specifically, what the basic policy does not cover them for.”

Underwriting agency Delta Insurance says many New Zealand companies have failed to review business continuity plans to keep pace with an evolving risk landscape.

Business continuity plans should not be restricted to natural disasters, he says. Cyber threats, pandemics, product recalls and major power outages need addressing too.

“It’s a veritable minefield of issues that can arise and it’s constantly changing and growing,” MD Ian Pollard said.

“A [business continuity plan] must be viewed as a ‘live’ document, which is regularly viewed and updated to address new threats and risks and changes to vendors and staff.”