The Earthquake Commission of New Zealand (EQC) Toka Tū Ake has secured $9.2 billion in reinsurance, effective from June 1.
The figure represents a substantial increase compared to the previous year’s reinsurance cover, nearing a $1 billion surge.
The primary objective behind this move is to shield New Zealand homeowners from the potential fallout of natural hazards while ensuring the continued affordability of home insurance.
“The continued growth of the programme demonstrates the confidence the international market has in our national insurance scheme,” said EQC chief executive Tina Mitchell. “Once again, we have been really well supported by our reinsurance partners, with many substantially increasing the amount of capital they have committed to the programme.”
Mitchell elaborated on the heightened interest witnessed this year, which included existing partners bolstering their commitments, along with promising propositions from both new entrants and returning markets.
“It is always encouraging to see partners returning to the programme and new reinsurers wanting to support our scheme. We see this as a huge vote of confidence in New Zealand and our approach to natural hazard risks,” she said.
Emphasising the importance of securing reinsurance, Mitchell noted that New Zealand homeowners contribute to an EQC levy, ensuring the availability of funds to address any arising claims.
“New Zealand homeowners pay an EQC levy of up to $480 (plus GST) for the first $300,000 of natural hazard damage to their homes,” she said. “We use some of that levy to buy reinsurance so we can be confident there are always funds available to meet any claims that may arise. This keeps the scheme affordable for homeowners and protects the Crown from financial risks in the event of a major event like the Canterbury earthquakes.”
She said that EQC triggers a reinsurance claim when damages from a single event exceed $2.1 billion, a threshold that has been met twice following the Canterbury earthquakes in 2010 and 2011.
“Most of the time, the EQC scheme is able to cover events, even the bigger events like Cyclone Gabrielle, through levies, but reinsurance protects New Zealand from any future devastating events and helps to ensure we will be able to pay claims when they fall due,” she said.
Mitchell also stressed the importance of preparedness in minimising impact and facilitating post-event recovery efforts.
“We can’t change the natural hazards we live with in our beautiful country, but we can prepare ourselves to reduce the impact of those hazards and provide a safety net to help New Zealanders recover from any major event,” she said.
Recent research found that New Zealanders have boosted their expectations regarding the performance of buildings during seismic events. Another recent study revealed that climate risks are increasingly driving home-buying decisions in the country.
