The Earthquake Commission (EQC) has secured record-high reinsurance of $7.2 billon on the international market, growing it by around $470 million from last year.
Over the past two years, EQC has expanded its reinsurance cover by $1.2 billion, as part of its mission to support New Zealand homeowners in accessing home insurance.
“We are grateful for the ongoing support of our long-standing reinsurance partners, particularly as the reinsurance markets have hardened significantly over the past few months,” said EQC chief executive Tina Mitchell. “We are extremely pleased to be able to secure this level of reinsurance for New Zealand homeowners.”
According to Mitchell, the international reinsurance market has hardened in response to considerable losses over the past five years, such as catastrophic flood, storm, and wildfire events. The market is also dealing with additional global pressures such as the COVID-19 pandemic and the war in Ukraine.
“In our discussions with the reinsurance companies, it became clear that all these factors have impacted their appetite for providing property insurance for natural disasters,” Mitchell said. “The EQC model is unique in the world and, even in those challenging conditions, it continues to be well supported by global insurers.”
Mitchell also said EQC is proud that its sizeable investments in research and modelling have given reinsurers confidence in the risks they are covering.
While EQC’s cap will double from $150,000 to $300,000 on Oct. 1, Mitchell said this does not mean that its reinsurance cover also had to be doubled.
“The large majority of expected EQC claims sits within the original cap, so any increase will support the anticipated small number of homes that suffer damage above $150,000,” Mitchell said, adding that EQC will continue to look for opportunities to grow the reinsurance programme where this represents good value for homeowners.
