WEBVTT - Bite: How insurers are mapping climate risk

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<v Speaker 1>You're listening to a Sharesies podcast.

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<v Speaker 2>Something I read from the Climate Change Commission, they said

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<v Speaker 2>15 years ago, damaging storm events once a month, now

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<v Speaker 2>more like once a week. Is that what you're seeing

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<v Speaker 2>kind of coming on the radar?

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<v Speaker 1>Well, that's what we've seen in the last 12 months

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<v Speaker 1>for sure. I don't think it's quite once a week,

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<v Speaker 1>but give or take. But if you look back though,

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<v Speaker 1>the year or two before that, it was quite benign.

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<v Speaker 1>And then you had 2023, which was the opposite of benign.

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<v Speaker 1>So I think What we are absolutely seeing, though, in

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<v Speaker 1>our data is that our five-year average storm event costs

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<v Speaker 1>are higher than our 10-year average, which is higher than

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<v Speaker 1>our 15-year average. So there absolutely is that trend happening.

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<v Speaker 1>And that trend is happening globally as well.

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<v Speaker 2>So I guess how much effort are you putting into

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<v Speaker 2>trying to get ahead of that or predict that? Or

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<v Speaker 2>is it just a case of dealing with it as

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<v Speaker 2>it comes through and then pricing accordingly?

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<v Speaker 1>No, so that's why we started on this risk-based pricing

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<v Speaker 1>track a couple of years ago. And that's also why

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<v Speaker 1>last year we introduced Landslip and C-Surge as two more

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<v Speaker 1>components of our risk-based pricing model to be able to

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<v Speaker 1>consider wider effects of weather and climate.

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<v Speaker 2>Were they not really covered before or considered?

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<v Speaker 1>Not in the same granular approach that we've done them,

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<v Speaker 1>that we've introduced in the same way.

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<v Speaker 2>Yeah, right. I mean, is it landing everywhere? Or are

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<v Speaker 2>there specific parts of New Zealand where you're seeing a

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<v Speaker 2>higher degree of risk there?

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<v Speaker 1>Every property, as I said, in New Zealand has a

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<v Speaker 1>different risk profile. And so it's not about whole areas

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<v Speaker 1>because you can get some properties in that that will

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<v Speaker 1>be low risk. Obviously, you will get, if you have

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<v Speaker 1>a whole lot of homes that are in the same area,

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<v Speaker 1>right next to a river that floods every day, then

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<v Speaker 1>all of those will have a similar risk profile. But

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<v Speaker 1>the ones one street back from them probably won't. And

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<v Speaker 1>so it's not about whole areas and that's why we

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<v Speaker 1>think it's really important and fairer to do it at

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<v Speaker 1>a specific location level. Investing involves risk. You might lose

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<v Speaker 1>the money you start with. We recommend talking to a

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<v Speaker 1>licensed financial advisor. We also recommend reading product disclosure documents

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<v Speaker 1>before deciding to invest.