The research that Jacob Pastor-Paz, Ilan Noy, and others conducted showed that New Zealand’s Earthquake Commission (EQC) should prepare for high payouts related to increases weather-related damage. These increases are between 7% and 8% for 2020 – 2040, and 9% and 25% for 2080 – 2100.
EQC is New Zealand’s public insurer and provides residential insurance for some weather-related damage. The EQC has already paid 450 million in payouts since 2000 due to weather-related hazards.
According to this research, payouts will increase as climate change will bring more intense and extreme weather events particularly extreme precipitation that will translate to more severe damages to residential properties and additional financial burden for the EQC.
How did researchers come up with their projections of future damages and figures?
First, researchers estimate the relationship between extreme precipitation events and the ECQ’s weather-related liabilities, analysing more than 8000 claims lodged between 2000 to 2017.
They used this relationship with climate projections from downscaled Regional Climate Models to predict the impact of future extreme weather events on EQC insurance claims up to 2100.
The result of the study shows that a future low-emissions scenario when GHG concentrations in the atmosphere are low, will see a decrease change in damages towards the end of the century, and a future with the highest-emissions scenario will see a difference in damages doubling between 2020 to 2040, and 2080 to 2100.
Information in the study can also be used by private insurers, regulators, and policymakers to assess the performance of both public and private insurers that cover weather-related risks under climate change.
Local governments, stakeholders, and infrastructure managers can also use data on the study to bolster climate adaptation and mitigation strategies, especially in flooding-prone and climate-vulnerable areas.
To read the full study, CLICK on the button below:
Pastor-Paz, Jacob, Ilan Noy, Isabelle Sin, Abha Sood, David Fleming-Munoz & Sally Owen.2020. “Projecting the effect of climate change-induced increases in extreme rainfall on residential property damages: A case study from New Zealand.” Motu Working Paper 20-02. Retrieved from http://motu-www.motu.org.nz/wpapers/20_02.pdf
How will climate change-induced increases in extreme rainfall effect EQC liabilities? (2020, March 5). The Deep South. National Science Challenge. Retrieved from https://www.deepsouthchallenge.co.nz/news-updates/how-will-climate-change-induced-increases-extreme-rainfall-effect-eqc-liabilities