New Zealand secures US$4bn reinsurance dealJune 6 2019 by InsuranceAsia News Staff
New Zealand’s Earthquake Commission has secured NZ$6.2 billion (US$4.12 billion) of reinsurance with the help of Aon for the year beginning June 1, according to EQC chief financial officer Chris Chainey.
The amount is a 12% increase on the previous year of NZ$5.5 billion and comes at a time when many of New Zealand’s insurers are considering how to cover property risks going forward.
Over 90% of New Zealand homes are covered by EQC through their private insurance policy.
Chainey said: “We pay a premium to buy reinsurance cover. This gives us NZ$6.2 billion cover for this coming year. And like a house insurance policy, we have an excess. Ours this year is NZ$1.75 billion. Below that amount, claims are paid from the Natural Disaster Fund, which is currently being rebuilt through EQC cover levies — or we call on the Crown Guarantee to ensure claims can be paid.”
He added: “New Zealand is a very small player in the international reinsurance market in terms of premium spend, however EQC buys one of the largest catastrophe programmes in the world. Since the Canterbury earthquakes, EQC has more than doubled the amount of reinsurance purchased, which demonstrates the confidence the market has in EQC.”
Chainey said that so far, the only time EQC’s reinsurance has been used is in relation to the Canterbury earthquakes, where reinsurers are expected to contribute about NZ$4 billion of the NZ$10 billion to NZ$11 billion that EQC expects.
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