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The Natural Disaster Fund

Statement of Investment Policies, Standards and Procedures

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

Under the EQC Act, we are required to administer the Natural Disaster Fund to protects its value, including through the investment of money held in the fund.

Since 1945 when Toka Tū Ake 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 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 used all of this, and Toka Tū Ake EQC is working to rebuild the Fund through levies and investments.

EQCover residential building cap and associated premium (levy)

In September 2021, the Government announced changes to the maximum amount of EQCover available (called the residential building cap) and associated premium (levy).

The EQCover building cap for a residential building containing one dwelling is usually $300,000 + GST for each natural disaster event.

The building cap that applies to an EQCover claim depends on when the damage it relates to occurred. If a property was damaged by a natural hazard event before 1 October 2023, the relevant building cap may be lower than this.  

Read more about the EQCover building cap and premium changes.  

The premiums charged for EQCover  are calculated to reflect the expected long-term costs of the perils covered by the EQC Scheme and the cost of administering it. Over time it is expected that the premiums, combined with investment of money in the fund, will help rebuild the Natural Disaster Fund following the Canterbury and Kaikoura earthquakes. 

What the Natural Disaster Fund is used for

The EQC levies paid as part of home 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 Toka Tū Ake 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, Toka Tū Ake EQC has purchased reinsurance (effectively insurance for insurers) to provide additional financial resources to meet claims in the event of a major natural disaster.

Toka Tū Ake EQC negotiates to buy reinsurance on the international market on an annual basis. In 2021, we paid around $190 million in reinsurance premiums to secure nearly $7 billion in reinsurance cover.

Like many other forms of insurance, Toka Tū Ake EQC must pay an excess or “deductible” for any claim it makes to reinsurers. Toka Tū Ake 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, have cost Toka Tū Ake EQC about $530 million, so this was paid from the Natural Disaster Fund rather than from reinsurance.

Since 1988, Toka Tū Ake 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

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

Through the operation of the Crown Guarantee Deed, Toka Tū Ake 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 Toka Tū Ake 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, Toka Tū Ake EQC also complies with the United Nations Principles for Responsible Investment.