NZ insured losses hit NZ$120 million after calm year

New Zealand recorded about NZ$120 million in insured losses from natural hazard events in 2025, according to Aon. After a quieter 2024, it marked another relatively modest year.

The total came from three notable events: two severe convective storms and Ex-Cyclone Tam in April.

Both 2024 and 2025 were below New Zealand's long-term average for insured losses. That followed a sharp spike in 2023, when losses exceeded NZ$3.8 billion.

The contrast highlights how uneven catastrophe losses can be from one year to the next. For insurers, brokers and risk advisers, a low-loss year in one market does not ease pressure created by volatile losses elsewhere.

James Knight, Head of Asia Pacific, View of Risk Advisory at Aon, described the past two years as comparatively calm in local terms.

"From a New Zealand perspective, the past two years have been relatively benign in terms of insured losses," Knight said. "That context reinforces the importance of preparedness as global loss volatility continues."

Storm losses

The report identified severe convective storms as a key contributor to insured losses both globally and in New Zealand. These events typically include heavy rain, strong winds and, in some cases, hail.

In overseas markets, hail is often a major source of insured damage, particularly to vehicles, roofs and agricultural property. In New Zealand, the pattern is different: smaller hailstones tend to limit broader property losses while still posing risks for farming.

"In New Zealand, severe convective storms typically involve heavy rainfall, strong winds and minor hail," Knight said. "Globally, hail is commonly the main cause of damage in these events, particularly to vehicles, vulnerable roofing and agriculture. In New Zealand, hailstones are generally smaller, limiting property damage while posing the greatest risk to agriculture."

Globally, severe convective storms have become more significant in insurers' loss calculations. The report said they have overtaken tropical cyclones as the costliest insured peril of the 21st century, generating US$61 billion in insured losses in 2025.

That matters for New Zealand because domestic insurance pricing and reinsurance arrangements are affected by international capital flows and global claims experience. Even when local losses are subdued, insurers still face market conditions shaped by catastrophe costs in larger regions.

Exposure growth

The report also pointed to changes in the underlying value of insured assets. Higher construction costs, along with a greater concentration of homes, businesses and infrastructure in weather-exposed areas, have increased the amount at risk.

As a result, insured losses can rise over time even without an increase in the number of major events. A smaller disaster can produce a larger claims bill if it hits more valuable assets or denser development.

Better access to natural hazard risk data is helping insurers in New Zealand make more risk-based decisions, Aon said. The trend mirrors developments in other markets, where insurers are relying more heavily on detailed exposure data to assess pricing, coverage and portfolio risk.

"Even in quieter loss years, there is an ever-growing insured value placed at risk," Knight said. "Exposure growth and the resilience of assets to weather remain important considerations when evaluating insured loss outcomes over time."

Global pressures

The wider report outlined several trends continuing to influence insurance markets. Insurers covered nearly half of global economic losses in 2025, leaving a protection gap of 51 per cent, the lowest level on record.

There were also 49 economic-loss events worldwide that each caused at least USD $1 billion in damage. The report said this showed the growing weight of frequent, medium-sized catastrophes, rather than only a small number of exceptional disasters.

Global fatalities from natural catastrophes reached 42,000, driven mainly by earthquakes and heatwaves. The Myanmar earthquake was the deadliest individual event outside heatwaves, with 5,456 lives lost.

These patterns have implications beyond direct claims. Reinsurance costs, capital allocation and underwriting decisions are all influenced by the scale and frequency of losses across multiple regions.

"These global trends continue to influence insurer capital and reinsurance markets," Knight said. "They remain relevant for New Zealand, even in years with lower local loss activity."

Climate modelling

Aon's latest report is also the first to incorporate forward-looking climate projections from its Climate Risk Monitor modelling tool. The change reflects a broader shift in the insurance sector towards using climate scenarios alongside historical loss data.

Such modelling is increasingly used to test how extreme weather patterns could affect assets, portfolios and insurance demand over time. For insurers and corporate clients, this can shape decisions on risk transfer, asset resilience and long-term exposure management.

"The use of forward-looking climate projections related to extreme weather provides additional insight to support more informed decision-making," Knight said.