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The Natural Disaster Fund

The purpose of the Natural Disaster Fund is to make sure that claims for damage by people with home and contents insurance can be paid out in the event of a natural disaster. See what EQC Cover provides.

Since 1945 when EQC was established (then the Earthquake and War Damage Commission), the Fund has been built by levies paid by New Zealanders as part of their home and contents insurance policies and investment returns from the Fund. In 2010, before the Canterbury and Kaikoura earthquakes, the Fund had over $6.1 billion in accumulated funds. The Canterbury and Kaikoura earthquakes may use all of this.

In November 2017, EQC levies increased from 15 cents to 20 cents per $100 of cover. The increase was to ensure that the premiums charged by EQC reflect the expected long-term costs of earthquakes, all other perils covered by the EQC Scheme and the cost of administering it. Over time it is expected that the increase in premiums will help rebuild the Natural Disaster Fund following the Canterbury and Kaikoura earthquakes. 

From July 2019, the EQC cap was increased to $150,000 (+ GST) and EQC will transition out of contents cover over a twelve month period. The change in the EQC cap means that the maximum premium a homeowner will pay EQC has increased from $276 (including GST) to a maximum of $345 (including GST)  a year for home insurance from 1 July 2019.

What the Natural Disaster Fund is used for

The EQC levies paid as part of home and contents insurance premiums are deposited in the Natural Disaster Fund. EQC then uses the money in the Fund to do its job under the Earthquake Commission Act 1993 (the Act). This includes:

  • settling claims made to EQC;
  • purchasing reinsurance from international financial markets; 
  • meeting the costs of administering the EQC scheme; and 
  • improving understanding of natural hazard risk and how to reduce it by funding research and education.


Since 1988, EQC has purchased reinsurance (effectively insurance for insurers) to provide additional financial resources to meet claims in the event of a major natural disaster.

EQC negotiates to buy reinsurance on the international market on an annual basis. In 2019, we paid around $170 million in reinsurance premiums for $6.2 billion in reinsurance cover.

Like many other forms of insurance, EQC must pay an excess or “deductible” for any claim it makes to reinsurers. EQC’s current deductible on reinsurance cover is $1.75 billion, which means that EQC must meet the cost of all claims up to $1.75 billion before it is able to call on that reinsurance cover. 

The deductible is charged for each natural disaster “event”. Claims from the Kaikoura earthquake, for example, are expected to cost EQC between $600 - 700 million, so this will come from the Natural Disaster Fund rather than from reinsurance.

Since 1988, EQC has paid over $2 billion in reinsurance premiums and has received more than $4 billion from reinsurers to cover claim costs from the Canterbury Earthquake Sequence. 

Crown Guarantee

EQC also pays $10 million to the Crown annually from the Natural Disaster Fund for the Crown Guarantee. This provides a guarantee to EQC that all of the claims made to EQC will be met by the government if the Fund is fully spent. In November 2018 EQC drew-down funds under the Crown Guarantee for the first time. To date, EQC has received around $200 million under the Crown Guarantee.

Through the operation of the Crown Guarantee Deed, EQC maintains a minimum balance of $50 million in the Fund to ensure that it has sufficient resources on hand to meet its financial obligations as they fall due.

Rebuilding the Natural Disaster Fund

At the time of the Canterbury earthquakes, the Natural Disaster Fund held $6.1 billion. The increase in EQC levy from 1 November 2017 will allow EQC to rebuild the Natural Disaster Fund to $1.75 billion by 2030, assuming there are no further large natural disasters.  

How the Fund is invested

The money in the Natural Disaster Fund is invested in accordance with relevant provisions of the Act, Ministerial Directions made under the Act and the Crown Entities Act 2004. Over its history, the Fund has invested in a mixture of New Zealand government stock and global equities. 

Consistent with the approach of other Crown Financial Institutions, EQC also complies with the United Nations Principles for Responsible Investment.

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