Doubling of EQCover reaches full implementation – insurer reacts

Toka Tū Ake EQC has confirmed that the increase in EQCover building cap – from $150,000 to $300,000 (plus GST) – now applies to all insured homes in New Zealand. For insurer FMG (Farmers Mutual Group), the completely rolled out adjustment is crucial.

According to Toka Tū Ake EQC, all pertinent insurance policies have been renewed, marking the full implementation of the legislative change that mandated the upgrade. Under the new law, the levy rate was also adjusted – from 20c to 16c per $100 of EQCover, which provides first-loss insurance for damage from named natural hazards.

“These changes respond to increased residential repair costs and support continued access to natural disaster insurance for homeowners in Aotearoa New Zealand,” FMG claims head Steve Beale said in a statement sent to Insurance Business.

“Having very high levels of insurance cover is essential for those affected by a major disaster, but also for the health of the whole economy. The Canterbury earthquakes resulted in around $40 billion in losses at an industry level, in an area not identified as being at high risk. Around 80% of those losses were insured.”

Beale went on to highlight the distinct advantage that New Zealand has when it comes to disaster coverage.

“Overseas, several countries with high natural hazard risk do not have an EQC-type scheme and have relatively low levels of disaster insurance uptake,” he said. “This places individuals, national and local governments, and their economies at high risk from natural disasters.”  

Read more: Land claims – just how complex are they?

Similarly, Toka Tū Ake EQC chief executive Tina Mitchell put a spotlight on this uniqueness of the Kiwi insurance market.

“Limited land cover is a unique benefit that only homeowners in New Zealand can access,” Mitchell said.

Aside from limited cover against damage to residential land from storms and floods, EQCover also spans damage caused by volcanic eruptions, earthquakes, tsunamis, land slips, and hydrothermal activity. It was created, Mitchell pointed out, to support initial losses by enabling access to affordable insurance.

“New Zealand has one of the highest levels of home insurance in the world, with around 90% of homes with insurance,” she said. “This is critical to community recovery after large-scale events.”

Under the natural disaster response model, Toka Tū Ake EQC is partnered with private insurers who manage EQCover claims on behalf of the Crown entity. These insurers are FMG, AA Insurance, Chubb, Ando/Hollard, IAG, MAS, Vero, Tower, and QBE.    

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