RMS estimates up to $2.5 billion in insured damages resulting from New Zealand quake

Following detailed analysis of property damage from the New Zealand earthquake, Risk Management Solutions (RMS), estimates total insured damages will range between NZD 2.1 billion ($1.5 billion) and NZD $3.5 billion ($2.5 billion).
RMS estimates two-thirds of the total insured loss will fall to the Earthquake Commission (EQC), which automatically covers all residential property owners who have purchased fire insurance, up to a limit of 100,000 NZD (approximately $72,700) per building and 20,000 NZD (roughly $14,500) for contents.
The residential losses in excess of the EQC limits will be covered by the private market, but this is expected to be less than 10% of the total, an RMS release says.
“There is greater uncertainty over the commercial and industrial property losses due to the higher individual insured building values and the uncertainty in damage ratios,” the release says.
“Given the Earthquake Commission’s reinsurance structure, with the first layer starting at NZD 1.5 billion ($1.4 billion), private market losses are likely to range between NZD 600 million ($400 million) and NZD 2.0 billion ($1.4 billion).
“A much clearer picture of the extent and severity of the earthquake damage has started to emerge, but uncertainty remains in estimating the total insured losses,” said Dr. Robert Muir-Wood, RMS’s chief research officer. “Two key factors that contribute to this uncertainty are the possible under-reporting of insured property values by the market and the potential that claims will be assessed ‘generously,’ in particular when older buildings get reconstructed to the latest building code.”