Climate change has gone beyond a buzzword. Right now, it’s an economic reality affecting every corner of modern business, and one particular sector that’s feeling the heat more than most? Insurance.

In recent years, climate change’s impact on insurance has become an increasingly urgent topic, with insurance companies facing mounting pressure to reassess risk models, adjust premiums, and better prepare for the unpredictable. From the growing frequency of natural disasters to increased operating costs, the changes are undeniable (affecting insurers, clients, and insurance brokers NZ-wide).

So, what does this all mean for the future of the industry? Let’s take a closer look.

The Relationship Between Insurance and Climate Change

The insurance industry is inherently tied to risk. Insurers assess, price, and manage risk every day, but as we can all see, climate change is rewriting the rulebook. What were once considered rare events are now occurring with alarming regularity.

Whether it’s flash flooding in the North Island, coastal erosion in the South, or increasingly severe windstorms across the country, Aotearoa is not immune. As extreme weather events become more frequent and more intense, insurance companies and brokers are forced to re-evaluate how they operate. That looks different for every company, every level of consumer, and every country. Let’s turn the lens on Aotearoa, where we’re seeing some of the most visible impacts of climate change.

The Climate Change Impact on Insurance: A Closer Look

Natural Disasters on the Rise

One of the most visible climate change impacts on insurance is the spike in natural disaster claims. Weather-related events are happening more often, and when they hit, they hit harder.

In New Zealand, we’ve seen:

• More frequent flood events affecting homes and businesses in previously “low-risk” zones.
• Coastal damage and slips disrupting transport networks and infrastructure.
• Cyclones and heavy rain events are causing widespread property damage.

This is translating into higher costs for our customers, and as brokers, the challenge is finding coverage in a world of increasingly higher premiums that anticipate more of these events on the horizon.

Rising Premiums, Reduced Availability

One of the key ways insurers manage increasing risk is by raising premiums. That’s why many homeowners and business owners have noticed a steady increase in their insurance costs over the past few years. In Aotearoa, where coastal living is highly sought after, this trend is especially concerning. Being able to afford insurance while living or working near the coast has graduated from purely a business concern to a matter of public policy.

Changes in Risk Assessment

Assessing risk for insurance has historically relied on traditional actuarial models, which frame past risks to predict potential future ones, but climate change introduces a whole new level of unpredictability that throws these models into question. To keep pace, insurers are now investing in new technologies and climate science to model risk more accurately. For brokers like us, this means incorporating data into our conversations with clients, so we can help them more effectively navigate the unique circumstances that impact their potential policies.

Impacts on Business Insurance

Finally, businesses, especially those in agriculture, tourism, and construction, are feeling the effects of climate volatility firsthand. From interrupted supply chains to physical damage and lost income, climate risk is now a core part of business insurance strategy.

All of this is accounted for, and it’s clear that climate change is having an impact at all levels of the insurance industry. The real question now is…

What Brokers Like Us Can Do?

Our job is to make sure you understand what insurance policies you have available, what you are signing, and whether the policy that exists now is still the right one for your needs. With the new challenges raised by climate change’s impact on insurance, our role is evolving. To navigate all these changes, we as brokers are committing to seeing this changing landscape as more than something filled with challenges. Instead, we’re doing what we can to find opportunities for our clients as we guide them through this evolving risk environment. Here’s how:

• We’re educating clients about the new risks posed by climate change, particularly in rural sectors which are most vulnerable to disruption.
• We’re encouraging proactive risk management, like choosing property upgrades or resilience planning.
• We’re working with insurers that are investing in sustainable risk modelling, so we can offer climate-resilient coverage options.
• We’re advocating for clients in high-risk areas to deliver fair access to insurance.

All of this builds a bigger picture of how climate change impacts insurance, both at the commercial level and the policy level. Climate change is not slowing down any time soon, and as it accelerates, its ripple effects will continue to challenge the insurance sector. But it’s also pushing us further, driving insurers, brokers, and clients to stay informed, flexible, and future-focused.

Find your best fit for now and for the future.

At Greenlight Insurance Brokers, we’re proud to be a team of the most trusted business insurance brokers in New Zealand. Not only do we take the time to understand your needs and tailor a genuinely useful insurance policy for your business, but we also stick with you to ensure the coverage remains a good fit as your business’s needs evolve.