Loss estimates rise in NZ

Estimates for the total insured losses emanating from the recent earthquake in New Zealand have risen sharply as the full scale of the disaster has unfolded.

Following the event, risk modelling agency EQECAT issued an initial loss estimate of between $1.5 billion and $4 billion. More recently, however, Swiss Re has said that the total insured losses from the earthquake could be between $6 billion and $12 billion.

Despite its high exposure to these losses and those of another recent earthquake in the country, New Zealand’s Earthquake Commission (EQC) has said that it has the capacity to cope, maintaining its ‘AAA ’ rating from Standard & Poor’s.

“The EQC will definitely be reviewing its reinsurance and reserving at the end of this whole episode,” said Robert Muir-Wood, chief research officer, RMS. “They did, however, have a three-year drop-down attachment point reinsurance cover in place, which recognised the potential for needing to cover more than one major event.”

The reinsurance community has also been quick to express sympathy and support for those caught up in the tragedy.

“The latest earthquake in New Zealand took a heavy toll in terms of human fatalities, despite the advanced risk prevention measures that are in place in New Zealand,” said Stefan Lippe, chief executive officer, Swiss Re. “The purpose of insurance and reinsurance is to help individuals and communities cope with the devastating impact of such events. Our role is to enable the people of Christchurch to recover swiftly from this catastrophe.”