NZ EQC buys more coverage at lower cost
The New Zealand Earthquake Commission has increased its reinsurance cover to NZ$4.5 billion, up from NZ$3.25 billion last year.
The cost of cover was around 10 percent lower than in the previous year and the savings made were used to secure the extra capital, said Ian Simpson, chief executive.
The commission will spend NZ$150 million or around 63 percent of its levy income in the financial year, ahead of buying cover from around 50 overseas reinsurers.
The reinsurance increases the total cover, including the first NZ$1.75 billion covered by the Crown, to NZ$6.25 billion.
Simpson said the improved terms the commission has been able to secure this year partly reflected an increase in the capital available to the global reinsurance market as the likes of US pension funds seek higher-yielding investments.
"Also EQC is one of the few insurers with a significant exposure to Canterbury that has been able to introduce a slight reduction to its liability [relative to earlier estimates], which went down very well," Simpson said.
"Now that we are 80 per cent of the way through all the building claims we are dealing with actual data rather than the conservative assumptions made earlier on."
