New Zealand’s Earthquake Commission has secured full placement of its $3.25 billion (C$2.6 billion) reinsurance cover, at a cost it says is similar to last year.
“The placement, which compares with $2.5 billion in the previous program, was 10% oversubscribed, and has a provision for one reinstatement after an event,” the commission said in a statement.
“We have ongoing cover sufficient to meet the costs of a significant disaster, although perhaps not at the levels experienced in Canterbury,” the organization’s chief executive Ian Simpson noted.
The EQC will be paying $160 million for the increased reinsurance coverage, according to reports.
The organization’s statement also said that “the ongoing support of international reinsurers was an essential underpinning of the New Zealand insurance market, particularly given the pressures on EQC’s Natural Disaster Fund as a result of the Canterbury Earthquakes.”
Increased transparency in the market, as well as audit reviews of claims and the Canterbury Home Repair Programme has increased reinsurer confidence, the commission’s statement noted.
“In the last couple of years, we have dealt with a number of situations that are entirely unique in insurance history,” Simpson said. “These include land damage due to liquefaction, and the associated need to undertake extensive geotechnical investigations.
“The requirement to apportion each claim to an event, given that there was a series of very damaging earthquakes in Canterbury, has been frustrating for customers and it has been administratively challenging,” he added. “But if we had fallen short on these obligations, there could have been a substantial long-term impact on the entire New Zealand insurance market.”
The EQC has received 467,000 claims made up of 736,000 building, land and contents exposure.