Bushfires are a foreign disaster for New Zealand. Although there have been wildfires in the past, none have been as intense as the recent cases in Australia. The climate in New Zealand is different, and the land isn’t expansive and arid. Towns in New Zealand are often surrounded by farmland rather than bush, making it unlikely for wildfires to spread on the scale and intensity we see in Australia. Very few bushfires in New Zealand cause substantial damage to residential property. However, some affect forested areas that are privately-owned, causing losses for the owners of those assets.

In the past five years, there have been two large bushfires that have damaged residential properties. The first was the Port Hill fire near Christchurch, that lasted between February and April 2017. The area was predominantly covered with bush and affected about a dozen residential properties.

The second took place in October 2020 and destroyed almost half of Lake Ohau village. The incident, which was described as one of the biggest wildfires in New Zealand, started in the surrounding bush. Unlike the Port Hill fires, the Ohau fire spread to the village area due to strong winds and destroyed 50 homes in the village. It was the most destructive bushfire in relation to residential property in New Zealand’s history, and the insurance cost exceeded the 2017 Port Hill fires and the 2019 Tasman District fires. 

Challenges in managing domestic claims

The claims we managed were predominantly domestic losses for damage to residential houses. Few commercial claims were filed. 

An essential part of our work as loss adjusters is to coordinate with origin and cause investigators with whom insurers have a good relationship and who, in turn, maintain a good relationship with the fire service. We all share a collaborative approach to investigations, allowing the required joint inspections with the various parties. This ensures that an accurate record of cause is established. This was the case with both the Port Hills and Lake Ohau fires. The relationship with investigators also allowed some preliminary responses as to the type and scale of damage to be provided to insurers early in the claim review, with access being provided to investigators well before public or loss adjusters could be on site.

One challenge we must address as loss adjusters is the emotional aspect to claims. People naturally have a deep emotional attachment to their houses and contents. Therefore, in the event of a total loss, everything that they have accumulated over years disappears, and this, understandably, has a significant impact on people’s lives. Lake Ohau is a good example of this. 

Although the Ohau area is a tourist and holiday home location, it is also the permanent residence for senior citizens and retired members of the community. The damage caused by the fire to their property has been devastating and traumatic. 

Another key challenge is resources. Ohau is far removed from any main city centre.  Queenstown is probably the closest, and it is at least a 90-minute drive to the area. Therefore, the issue is making sure that you have enough experienced loss adjusters and surveyors available to manage such a high number of claims within limited timeframes.  Due to the extent of damage within Ohau, there was a strong requirement for demolition and removal of debris to be advanced as quickly as possible so that other residents could return home, and to prevent contamination from debris to the remaining environment. As a result, loss adjusters and insurers required a team of professionals from a multitude of other sectors such as demolition crews, clean-up workers, etc to advance this work as efficiently and quickly as possible. Additionally, temporary accommodation must be arranged for insureds who cannot return to their homes due to the damage sustained.  

Role played by insurers

Insurers were very proactive and swift in settling claims following the Lake Ohau fire. Such a response was commendable. They provided clear directives and worked with us to establish agreed processes as to how to quantify claims quickly – bearing in mind of course, that there remained a potential for litigation. 

Insurers requested that we establish a fast and effective plan for the response, including thorough recording of information at each loss site, and solid quantification checks. Within the first week, we had set up systems with insurers; and within one month, most of the claims we had were settled. For each property, we established a full record including details of the original building, the extent of the damage it had sustained, an estimated reinstatement cost, including details of how it was quantified, and the demolition work and costs involved (including an audit of the same). This process, for which everything was accounted, worked well with insurers and all parties involved. 

Having said that, insurers are watchful of the impact bushfires may have in New Zealand.  In particular, they are focused on residential property losses and subsequent claims. 

In the last eight or nine years, New Zealand has changed from having a size-based total replacement policy for most domestic buildings to sum insured cover.  This means policyholders need to be mindful of factors such as accuracy of building costs, demolition expenses, yearly inflation and the impact of a remote location setting.

Not many people take into account changes in construction prices. For example, a house that might have been worth NZ$2,000 per square meter three or four years ago, might cost NZ$3,500 per square meter today, given the country’s economic growth and substantial inflation in the building industry. 

Role of technology in damage assessment

To aid in understanding the scope and scale of damage to the village and location of insured buildings, we used drones to assess the damage caused by the Lake Ohau fire. Because of the fire’s intensity and the extent of the damage, Fire and Emergency New Zealand (“FENZ”) cut off any access to the site for inspection until they were able to determine that there was no loss of life and that it was safe to enter. 

Another complicating factor was very strong wind, thereby increasing the chances of wind-blown debris spreading across the village and putting more people at risk. As soon as the wind abated, we had drones in the air to assess the scale of the loss. The quick availability of this information allowed us to collaborate with the origin and cause the investigation team to start to identify those parts of the village that had been damaged and to provide feedback to insurers as to the extent of loss before we were able to enter the village. In turn, insurers could begin to check their records to determine if they had properties insured in those areas and take a proactive review of the damage. This proactive approach by insurers was invaluable as some people, particularly in case of those owning holiday homes, might not have known whether their property was affected. 

We obtained a lot of shared video footage that we made available to investigators. Those videos allowed us to establish a review process. We began requesting property files from councils before we were able to put feet on the ground and see the damage onsite. 

Focus on prevention

New Zealand has always been proactive in terms of fire response and boasts high quality rural fire systems including comprehensive notification procedures as to when you can or cannot use anything with fire or heat sources. Firebreak systems are another example of prevention tools and are common throughout the country, particularly in residential areas. In Wellington, the surrounding hills are carved with firebreaks to prevent or minimise the spread of fire. 

Prevention will cost much less than an actual catastrophe. That is the whole point; it is vital to prepare so that the crisis does not take place. And if it does, you are ready. 


Fires will continue to be a formidable risk, and property owners should use this time to assess potential exposures and take necessary precautionary and preventative measures.  When disasters happen and fire damage does occur, working with a team of experienced loss adjusters and related experts can help minimise the impact of such losses and ensure steps are taken toward proper restoration and recovery.

June 2021

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