Cost of Natural Disasters

IBISWorld forecasts the cost of natural disasters to fall by 87.9% in 2024, to $462.2 million. This drop is largely due to several costly natural disasters in 2023 elevating the base year. The cost of natural disasters is extremely volatile due to the random nature of catastrophic events. New Zealand is vulnerable to natural hazards due to its geographic characteristics. Sitting on the Ring of Fire subduction zone, New Zealand is situated on the intersection between two tectonic plates. This factor heightens the incidence of seismic, volcanic, and hydrothermal activity. In addition, New Zealand’s large coastline and lack of surrounding land mass increase tsunami risk. The location of New Zealand in the roaring forties weather system also subjects the country to frequent extreme weather events, including storms and high winds.

As at May 2024, two natural disasters have occurred in the current year. These are fires in Port Hills and Weka Pass in Canterbury in February. However, the Insurance Council of New Zealand has not provided costs for the value of any insured losses. Four natural disasters occurred in 2023. These were the Auckland floods in January, tropical cyclone Gabrielle in February and severe storms across the North Island in February and May. The combined cost of these events is currently close to $3810.6 million. In 2022, the total cost of natural disasters was $357.1 million. Major disasters in 2022 included the eruption of the Hunga-Tonga-Hunga-Ha'apai volcano and tsunami in January, tropical cyclone Dovi in February, the North Island floods in March, the Levin tornado in May, North and South Island storm in June, severe storm across the country during July, the Nelson-Tasman floods and the extensive floods around the rest of the regions in August. Overall, IBISWorld forecasts the cost of natural disasters to increase at a compound annual rate of 17.5% over the five years through 2024.