Floods lift NZ cost risk to world No 2
New Zealand is in the unenviable club of 10 most at-risk nations when it comes to the cost of property damage from national disasters, ranking second behind flood-prone Bangladesh.
Chile, which is also prone to earthquakes, ranks third, followed by China, Vietnam, Indonesia, Thailand, Turkey, the Philippines and Japan.
But the good news is New Zealand remains one of the most insured countries in the world. It ranks fourth behind the Netherlands, South Korea and the United States for insurance penetration, though insurance coverage has fallen since the Canterbury earthquakes of 2011.
The findings are from Lloyds of London’s insurance risk index, which puts an annual expected cost to countries for natural disasters that damage property.
The expected annual cost for New Zealand is 0.66 per cent of the country’s GDP, compared with 0.83 per cent for Bangladesh and 0.65 per cent for Chile.
There is a backward-looking element to Lloyds’ calculations. India, for example, was a top 10 risk but has suffered relatively less in recent years from natural disasters than the Philippines, which replaced it in the top 10.
Lloyds said: ‘‘New Zealand is number two on the list, with an expected annual loss of 0.7 per cent . . . After the Christchurch earthquake of 2011, which caused damage equivalent to 14 per cent of the country’s GDP, the country has suffered from further seismic events and several significant floods. Chile, which was number two in the list in the 2012 report, drops to number three.
‘‘While it has fallen down the list relative to New Zealand, Chile remains exposed to earthquakes, wildfires and volcanic activity.’’
Kiwis remain diligent buyers of insurance, however.
‘‘New Zealand is still among the top countries, but has slipped from 2nd to 4th place as insurance penetration reduced,’’ Lloyds found.
The Insurance Council of New Zealand said there were technical reasons for the fall that should not ring alarm bells. Council chief executive Tim Grafton urged people to check that their homes, possessions and cars were adequately insured.
He said: ‘‘It’s possible that people are underestimating the cost to replace their assets, which could leave them vulnerable should another major disaster strike.’’
After the Canterbury earthquakes, insurance companies changed their policies from ‘‘total replacement’’ to ‘‘sum insured’’, meaning it is now up to homeowners to estimate the cost of replacing their home with the help of online calculators.
‘‘We recommend everyone checks their current cover to ensure it’s fit for purpose and will give you what you need in the event of a total loss,’’ Grafton said.
But he said the country needed to find ways to become more resilient, with a greater focus on where and how we build.
‘‘This report shows how risky New Zealand really is . . . Being a more resilient nation is one that says we don’t want to be building property that’s vulnerable to climate change impacts.’’