Cost of natural disasters

IBISWorld forecasts the cost of natural disasters to climb by 214.2% in 2026, to $465.9 million. This increase is largely attributable to the relatively few natural disasters in 2025, resulting in growth from a low baseline being expected. 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 at 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 September 2025, only one natural disaster for which the Insurance Council of New Zealand has provided costs for the value of any insured losses has occurred in the current year. This was the Mangawhai Tornado in 2025, which cost $10.2 million. In 2024, natural disasters were also minimal, with storms in Otago and the East Coast of the North Island accounting for $63.5 million in damages. 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 was $3875.5 million. In 2022, the total cost of natural disasters was $357.2 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, the 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 7.5% over the five years through 2026.