EQC obtains increased reinsurance cover for Kiwis
The Earthquake Commission has secured a record-high natural hazard reinsurance cover of nearly $7 billion on the international reinsurance market for the next financial year.
“We are extremely pleased we have been able to increase the cover for New Zealand homeowners despite the tougher international reinsurance market due to the impact of Covid-19 and several major natural disasters,” says EQC chief executive Sid Miller.
Reinsurance is the practice where insurers transfer portions of their risk portfolios to other parties through an agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.
Sid says that this year’s negotiations have demonstrated the trust the international reinsurers have in the EQC’s scheme and the loss modelling and research which supports it.
“Creating trust at a personal level with the key people in the reinsurance market is vitally important, but due to travel restrictions, the negotiations had to be done through countless late-night video calls, so to end up with such a good outcome speaks volumes to the reputation EQC has built over many years and the outstanding support provided by our reinsurance broker, Aon,” says Sid.
The 12.5 per cent increase in cover for an 11 per cent increase in total premiums represents good value for the Crown and New Zealanders in light of the current challenging reinsurance market and supports ongoing access to affordable home insurance for homeowners, says Sid.
“It is also pleasing to see that around two-thirds of this cover is provided by the same reinsurers who covered the damage from the Canterbury earthquakes, so again, it shows the reinsurers continue to trust our ability to manage the impact of natural hazards in New Zealand. We thank them for their ongoing support,” says Sid.
He explains that EQC invests over $17 million each year into natural hazard research and modelling, as well as mitigation strategies like better engineering solutions.
“All of that research feeds into loss modelling that EQC shares with its reinsurers to provide a New Zealand view of the natural hazard risks the scheme covers.
“This modelling enables New Zealand and the international insurance market to understand and quantify the risk underwritten by the scheme and provide confidence in underwriting any potential damages after an event,” he says.
EQC’s Research and Resilience programme supports geologists, seismologists, volcanologists, engineers, statisticians, risk modellers and other experts at universities and agencies around the country.
“This research helps us to understand the risk our natural hazards pose, but more importantly, helps us to prepare and manage the impact of these natural hazards.”