Floods set to push up cost of insurance

00:01, Dec 16 2013

Insurers are warning that flood cover in the Nelson region is likely to become more expensive in the wake of the 2011 and 2013 floods, which have together brought claims totalling more than $50 million.

Today marks two years since the 2011 flood peaked after several days of unrelenting rain, washing homes off their foundations, severing roads and bringing down an estimated 1600 slips in parts of Nelson city and Tasman district.

Rather like the Christchurch earthquakes, the disaster spared many parts of the region but did enormous damage in the places where it hit hardest. The insurance claims totalled $16.8m.

In April, Stoke and Richmond were hit by a flash flood that didn't do nearly as much land damage but has produced a whopping $33.7m in claims.

Insurance Council chief executive Tim Grafton said the 2011 flood generated 1358 claims, comprising 1186 for domestic damage, 84 for commercial material damage, 18 for business interruption, three marine, 37 motor, and 30 involving other types of cover.

It was difficult to make comparisons with other natural disasters, Mr Grafton said.


"For a city the size of Nelson, the 2011 costs were significant, and if the events of 2011 and 2013 are taken into account, then the costs for the city are exceptionally high."

Grafton said climate change scenarios all pointed to the Nelson area receiving higher levels of rainfall, and unless measures were put in place to minimise the social and economic effects, the likely increased severity and frequency of severe weather events would push up costs.

"As insurance is about pricing risk, that can only mean that flood cover will probably become more expensive."

The Earthquake Commission has paid out more than $17.3m on claims from the 2011 flood, with almost all claims now dealt with.

EQC national operations manager Barry Searle said there were still some managed repairs under way.

Underlining the difference between the two floods, he said EQC had received just 224 claims from the April event, with more than $1.6m paid out and 21 claims still open.

While a handful of residents in Nelson and Golden Bay are still grappling with the problems served to them by the 2011 flood, including several families who won't live in their old homes again, both councils have made much progress on the repair work.

The Nelson City Council says permanent repairs to Cable Bay Rd, its biggest headache following the flood, won't be finished until March 2015, but it has only 13 slip sites in other areas still to work on.

The Tasman District Council has also completed most of its flood repairs, but still has work to do on Abel Tasman Drive between Ligar Bay and Wainui Bay, some of which will not be completed for several years.

TDC regulatory manager Adrian Humphries said the new flood recovery and protection works probably meant Golden Bay was better prepared for flooding than it was before December 2011.

But he warned that a similar quantity of rainfall would again wreak havoc.

The December 2011 rain was rated as a one-in-500 years or even 750 years event, and the area's infrastructure wasn't designed or built to cope with something like that, he said.

"We can build to that, but it would be ridiculously expensive, and you'd use half your land in building drainage."