CoreLogic and Munich Re data spotlights regions most at risk in next decade
Two major data-driven organisations have performed an analysis on the flood threat facing New Zealand’s residential property sector – finding that not only is the average annual cost of river flooding to residential buildings already topping NZ$100 million, this annual cost could increase by more than 20% by 2050, and greater than 30% by 2100.
Further major findings by CoreLogic and Munich Re show that today, 11% of New Zealand residential property value is exposed to river flood risk, and analysis shows this will increase to 17% by 2050. 5% of properties exposed to river flood risk lie within 100-year flood risk zones today (i.e. has a 1% chance of being exceeded in any one year). This risk increases to 9% by 2050.
The new climate risk data analysis follows a strategic partnership, formed in 2020, between global property data and analytics company CoreLogic and Risk Management Partners a division of Munich Re, one of the world’s foremost reinsurers with market-leading climate analytical capabilities. Together they are providing a very comprehensive view of the current and future impact of climate change on individual properties in New Zealand, with implications for home owners, lenders, brokers, insurers, and property professionals.
Regions most at risk
Otago is identified as having one of the highest flood risk concentrations in New Zealand when annual average river flood loss is calculated relative to total property value in the region. Otago accounts for 5% of total national residential property value but 15% of the national annual average river flood loss.
The major population centres of Auckland and Wellington are likely to see increased flood risk into the future, and the Hawkes Bay, Manawatu-Wanganui and Marlborough regions will also see some of the highest increases in the average annual flood loss by 2050, potentially as high as 33%, 23% and 21% respectively.
Alan Gilbert, CoreLogic Head of Banking & Finance Solutions, said, “The latest data CoreLogic has produced in partnership with Risk Management Partners is especially timely given the mandatory climate-related financial disclosures which will affect around 200 large institutions starting in 2023, and the recent flooding events impacting the South Island.
“The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act represents the biggest step yet in imposing reporting requirements around climate-related risks, and CoreLogic has been ramping up our portfolio risk analysis capabilities to help the banking, investment, and insurance sectors effectively identify, assess, and manage climate-related risks. We expect the latest analysis with Munich Re to concentrate the minds of institutional leaders, policymakers, and home owners alike, and we are already collaborating with industry to provide tailored data and solutions in service of both mandatory reporting and mitigating climate-related risk.”
Munich Re Australia Managing Director Scott Hawkins said, “New Zealand will see an increase in both the frequency and severity of weather events due to climate change. Weather-related disasters might in sum become as destructive to New Zealand as earthquakes. As the risk increases strongly for many regions, it is essential for communities, commercials and individuals to understand and manage their exposure to climate risks. In this regard, Munich Re with its century long experience in reinsuring natural catastrophes is an ideal partner not just for primary insurers but for companies of all sectors.”
The CoreLogic and Munich Re analysis is congruent with Insurance Council data released in late July showing insurers in New Zealand have paid out close to $200 million for extreme weather claims in the 12 months to June 2022, after 2021 was the costliest year on record –with $324 million paid out – for extreme weather events. This data also showed that the flooding of March 2022 cost nearly $120 million, and preliminary claims for the June 2022 storms in the North and South Islands already total $15.5 million.
As part of the partnership, CoreLogic and Munich Re analysed millions of data points to determine the risks New Zealand property owners face as climate change affects local weather systems. This unique analysis provides a snapshot of the detailed and bespoke insights CoreLogic and Munich Re are able to provide to the financial services and other property-related sectors.