News eDaily28 Jul 2017

New Zealand:Munich Re warns reinsurers might withdraw quake cover

28 Jul 2017

The world's largest reinsurer has warned commercial building owners that earthquake cover could be withdrawn because of New Zealand's seismic risks.

Mr Scott Hawkins, of reinsurance giant Munich Re, told an building industry conference in Wellington earlier this week that there could be a "knee jerk reaction" by insurers if New Zealand suffered more earthquakes, reported stuff.co.nz.

The insurance industry thus needs to carefully consider its responses to quake insurance claims, he said.

"What we don't want, is the capital providers, or the insurers, saying: 'OK, we won't cover anything that's non-compliant [with the building standard] from tomorrow,' because that's also not something that is going to be useful for the people or the economy or businesses."

There was a danger investors would stop funding reinsurance companies because "the level of risk is too high for the return", which would limit the amount of insurance coverage available for earthquake damage, he said.

The total cost of the 7.8-magnitude Kaikoura earthquake last November is yet to be finalised. As at 21 June, insurance claims totalled NZ$1.84 billion (US$1.38 billion), with more than half for damage to Wellington buildings and businesses.


 

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