The Earthquake Commission (EQC) has secured $6.2 billion worth of cover from international reinsurers for the next 12 months, effective June 01. The amount is up from $5.5 billion last year and $4.83 billion the year prior.
EQC uses reinsurance to pay-out claims for damage caused by large-scale natural disasters such as earthquakes and tsunamis. According to Stuff.co.nz, the reinsurance cover carries an excess of $1.75 billion and was arranged through London-based brokerage Aon.
New Zealand’s natural disaster fund, which is backed by levies on homeowners’ insurance premiums, provides coverage for pay-outs under the excess amount. It is currently unknown how much EQC paid in insurance premiums for the cover.
Chris Chainey, chief financial officer at EQC, told Stuff.co.nz that the cover demonstrated the confidence that international reinsurers have placed in the organisation.
“New Zealand is a very small player in the international reinsurance market in terms of premium spend, however, EQC buys one of the largest catastrophe programmes in the world,” said Chainey.
“Our reinsurance programme is critical to providing cover to New Zealand homeowners for big events like the Canterbury earthquakes, so we’re very pleased our reinsurers continue to back us.”
EQC has so far only used the reinsurance for claims related to the Canterbury earthquakes. According to Stuff, of the $10 billion to $11 billion EQC expects to pay-out in earthquake claims, reinsurers are expected to contribute about $4 billion.
EQC currently has 2,181 outstanding claims from the Canterbury earthquakes, with 564 officially in dispute.
