News Reinsurance07 Jun 2024

New Zealand:EQC secures record level of natural hazard reinsurance

| 07 Jun 2024

The government-run natural disaster insurance provider, EQC, has secured a record level of reinsurance of NZ$9.2bn ($5.7bn) from 1 June 2024 to protect New Zealand homeowners from the impact of natural hazards and keep home insurance affordable.

This figure includes NZ$225m that is in place from a multi-year catastrophe bond placed in 2023, and is close to an NZ$1bn increase from last year’s total reinsurance cover.

The continued growth of the programme demonstrates the confidence the international market has in our national insurance scheme,” said EQC chief executive Ms Tina Mitchell in a statement.

Once again, we have been really well supported by our reinsurance partners, with many substantially increasing the amount of capital they have committed to the programme.”

Ms Mitchell explains that the increased interest this year included existing partners increasing their offering, and offers from new and returning markets.

We see this as a huge vote of confidence in New Zealand and our approach to natural hazard risks,” said Ms Mitchell who reiterates that securing reinsurance is one of EQC’s primary tasks.

New Zealand homeowners pay an EQC levy of up to NZ$480 (plus GST) for the first NZ$300,000 of natural hazard damage to their homes.

Ms Mitchell explains that EQC makes a claim for reinsurance when the damage from one event exceeds NZ$2.1bn.  EQC has done that twice, after the Canterbury earthquakes in September 2010 and February 2011, when EQC received about half a million claims which are currently estimated to cost around NZ$12bn.

Most of the time the EQC scheme is able to cover events, even the bigger events like Cyclone Gabrielle, through levies, but reinsurance protects New Zealand from any future devastating events and helps to ensure we will be able to pay claims when they fall due.”

EQC is a government entity that provides natural disaster insurance for residential property, administers the Natural Disaster Fund and  funds research and education on Nat CAT.

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