As the lake slowly creeps closer to her front door, a flooded Rotoehu homeowner fears future insurance claims won’t be covered.

It has been a year of “truly unprecedented” climate-related claims, the Insurance Council says.

It tallied the cost of extreme weather event claims in 2022 at $351.26 million - up from $324.94m the year before and $274.27m in 2020.

Those tallies have already been dwarfed this year, with 107,569 claims from the Auckland Anniversary Weekend floods and Cyclone Gabrielle totalling an estimated $3.18 billion, among other damaging storms.

Lakes Rotoehu and Rotomā have been rising with each weather event, causing widespread issues that resulted in two joint council and agency groups being formed to seek short-term and long-term solutions for affected residents.

Rotoehu homeowner Joan Blair is one of several in the community faced with a flooded property following months of heavy rain events, and among those who have made an insurance claim.

The Tauranga resident planned to live in the Kennedy Bay house permanently following her husband’s retirement.

Nothing in the property’s LIM report concerned Blair when the pair bought it last year and she was not aware of any previous flooding issues.

But she said the home is not currently liveable due to the amount of water on the property. The septic tank is underwater and she paid $30,000 to raise the piles of the house in May in an attempt to keep the water out.

Her insurance company FMG paid them back for this, as it was classed as a flood event.

The policy has since been renewed for the next year with no changes, but Blair sought clarity on the wording and whether she would be covered for damage from similar events in the future.

“Bit of a wait and see to how it will be perceived in the future.”

She questioned whether it was worth paying without certainty.

“Fool if you do, fool if you don’t.”

Water has swamped underneath Joan Blair's Rotoehu home. Photo / Laura Smith.

An email from FMG in June advised any future claim would likely be classed as a flood, but the issue was if the loss was sudden and unforeseen — a requirement for claims to qualify. Gradual damage was excluded.

It said it was difficult to say how a policy might respond to claims as they were “heavily dependent on the precise facts”.

It provided some situations involving elevated lake levels where damage might be covered and some where it might not as guidelines, but stressed there were no guarantees.

“We appreciate that this uncertainty is not easy to live with but we hope you accept that we have done our best to set out what might happen in a few situations.”

FMG’s head of claims Steve Beale told Local Democracy Reporting there had been a “truly unprecedented” number of climate-related claims and as more catastrophic weather events hit there was potential for some properties to become uninsurable. For example, areas of Hawke’s Bay deemed unsuitable for dwellings after the cyclone six months ago.

Between 2018 and 2022 it received 130 weather-related claims from Rotorua district. In the first three months of this year alone it received 30.

Beale said it generally did not exclude flood cover in Rotorua or New Zealand.

In neighbouring Ōtautū Bay, Adrian Holmes’ lakeside holiday house was inundated by groundwater.

The lake was about two metres away, and Holmes was grateful at least the water on the ground floor is relatively clean.

He put in an insurance claim in January but expected it would be months yet before it was finalised.

Holmes feared the home would become uninsurable in the future.

He said there was now no value in the properties: “We can’t sell.”

Rotorua Lakes Council deemed one house uninhabitable as it is unsanitary.

A council spokesman said it advised homeowners to contact their insurance companies about flood damage. Rates remissions applications could be considered on a case-by-case basis.

Insurers inundated with claims

Insurance Council spokesman Christian Judge said this year had seen a “truly unprecedented level of climate-related claims”.

Speaking generally about the fears of Rotoehu residents, he said people in that sort of situation should talk to their insurer, shop around for cover if necessary, and speak with the local council about flood prevention work.

He said all insurers were facing common headwinds in the near future around disaster claims, inflation and a “much tougher reinsurance market”.

“How they deal with these pressures is down to individual insurers. However, it is clear from recent renewals, and the public statements of listed insurers, that this is resulting in higher premiums and a new focus on risk.”

He said the insurance council and insurers had been calling for sustained investment in resilience measures for many years.

“Investments that reduce actual risk are the best way to keep insurance both generally available and relatively affordable.

“What we are seeing in response to Auckland Anniversary Weekend floods and Cyclone Gabrielle is a new approach being taken by central and local government through the introduction of the Categorisation system.”

This five-tier assessment system indicates risk levels and mitigation requirements for affected buildings.

Between September 2021 and February 2022, insurer IAG received 8293 claims for property damage related to severe weather.

Rotoehu lake level has risen to a point where lakeshore homes are being flooded. Photo / Andrew Warner.

That number leapt to 41,596, an increase of 402 per cent, for the same period to this year.

It is the parent company of AMI, State and NZI and a spokesperson said it had received 51,000 claims for the North Island floods and Cyclone Gabrielle.

This was more weather-related claims than it received for the whole country in the last two and a half years.

“Flood claims can be complex, especially those involving land damage and where input is required from technical experts and councils.”

It was continuing to provide cover in Rotorua as usual.

Tower chief underwriting officer Ron Mudaliar said ”The personal and economic impacts of these events are a reminder of the critical role insurance plays in bolstering our collective resilience.”

It had received a small number of claims from flooding Rotorua this year and he offered information about its flood risk tool that gave homeowners an individual rating for their risks of inland flooding and earthquakes.

“The overall response from customers has been positive, with nearly 90 per cent receiving a reduction in the flood risk portion of their premiums.”

Customers with a much higher rating receive a call from Tower for an individual assessment of their home and risk.

“We may also support these customers to find a specialist insurer. Considerations for offering insurance to these addresses would take into account mitigations the homeowner may have in place.”

It will this year add landslip and coastal risks to its risk tool.

Public Interest Journalism funded through NZ On Air.