CBA On Recent Flood Damage & Insurance Flows

CBA note the flood damage could aid NZD from the perspective of insurance claim inflows, but the benefit is not expected to be large.

"The recent floods in New Zealand have caused widespread damage. Insurers may need several months to calculate the damage. It will take further months to assess claims, organise repairs and replacement, and settle claims. If history is a guide, claims will start to be settled in the second half of this year and spread out over the next few years. We expect the claims to be settled much quicker than the $NZ23bn Canterbury earthquake. Reinsurers are typically based in Europe. Foreign capital will flow into New Zealand later this year. The capital inflows may support NZD at the margin. But the boost to NZD is unlikely to be large. The peak of quarterly capital inflows in the aftermath of the Canterbury earthquake was only $NZ1.5bn compared to average daily turnover of NZD/USD spot of $NZ29bn per day in 2022."