IAG forecasts NZ$1bn increase in quake losses

Insurance Australia Group expects as much as NZ$1 billion more in final claims from the 2010 and 2011 Canterbury earthquakes due to an increase in forecast rebuild costs and a number of adverse court judgments.

The Sydney-based company has said it now anticipates final claims from the quakes to increase by between NZ$750 million and NZ$1 billion. But it still expects those claims to fall within its NZ$4 billion reinsurance limit.

The bulk of the increase relates to the February 22, 2011, quake, which IAG anticipates will exceed its NZ$3.25 billion reinsurance coverage but losses from the other quakes are expected to fall within its broader programme.

"The reassessment of expected final claim amounts follows an increase in forecast repair and rebuild costs, the continued notification of new household claims that have exceeded the Earthquake Commission's NZ$100,000 limit, and a series of adverse court judgments which have impacted the insurance industry over the past six months," the company said.