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International reinsurers continue to provide cover to EQC

International reinsurers have agreed to provide approximately $5 billion of cover for the Earthquake Commission following the conclusion of the 2018 reinsurance negotiations. 

Chief Executive Sid Miller says that EQC’s reinsurance premium for 2018/19 is $179 million, and the reinsurance placement insures the Crown for the cost of claims from insured homeowners in large natural disaster events.

“The ongoing support of international reinsurers shows they continue to have confidence in EQC and their support underpins New Zealand’s insurance market. Our team works hard with EQC’s reinsurance brokers to build confidence in New Zealand and maintain access to affordable risk capital.”

Mr Miller says that EQC has put a lot of effort into helping the reinsurers understand New Zealand hazard risk.

“We use claims information, and the science research we fund on earthquake, volcanic eruption, tsunami, landslip and hydrothermal hazards. We also use our Minerva earthquake impact estimation tool to work out what the likely losses from earthquakes would be.

“All this helps reinsurers reduce the uncertainty associated with understanding their exposure to future New Zealand events. Securing reinsurance at rates comparable to recent years is a great vote of confidence in EQC from reinsurers.

"Our reinsurance is a bit like a very large house insurance policy — we pay an annual premium for a ‘sum insured’ with a certain level of loss retained under an ‘excess’. In EQC's case, reinsuring for all insured homes in New Zealand, the excess is $1.75 billion. This means that most of the time we are paying claims out of the Natural Disaster Fund rather than recovering from the reinsurance programme.

“Our reinsurance is to help pay claims when something really big, like the Canterbury earthquake sequence, happens. All up, EQC expects to spend $10–11 billion managing and paying claims for Canterbury with $3.5–4 billion of that recovered from reinsurers."

EQC's reinsurance programme is critical for keeping natural disaster insurance accessible to New Zealand owners.

"All our reinsurance comes from overseas. New Zealand is exposed to high levels of natural hazard and contributes a tiny percentage to international insurance premiums.

“The reinsurers have a choice every year about whether they continue to give us cover, so we maintain a strong programme of consultation, long-term investment in relevant science research, hard data and information so they choose to continue covering EQC," says Mr Miller.


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