New Zealand’s earthquake body secures $7bn cover, praises Aon and ‘trust’ of reinsurers
The Earthquake Commission (EQC), New Zealand’s state-backed body that provides insurance to homeowners, has secured a record-high reinsurance cover of nearly $7 billion on the international reinsurance market for the 2021/22 financial year.
EQC said it achieved a 12.5 percent increase in cover for an 11 percent increase in total premiums, something it described as good value in light of the current challenging reinsurance market.
Its CEO said negotiations, done virtually this year due to travel restrictions, have demonstrated the trust the international reinsurers have in the EQC’s scheme and the loss modelling and research which supports it.
He also praised the work of Aon and noted that two-thirds of the cover is provided by the same reinsurers which covered the damage from the Canterbury earthquakes.
EQC invests more than $17 million each year into natural hazard research and modelling, as well as mitigation strategies like better engineering solutions.
Sid Miller, CEO of EQC, said: “We are extremely pleased we have been able to increase the cover for New Zealand homeowners despite the tougher international reinsurance market due to the impact of Covid-19 and several major natural disasters.
“Creating trust at a personal level with the key people in the reinsurance market is vitally important, but due to travel restrictions, the negotiations had to be done through countless late-night video calls, so to end up with such a good outcome speaks volumes to the reputation EQC has built over many years and the outstanding support provided by our reinsurance broker, Aon.
“It is also pleasing to see that around two-thirds of this cover is provided by the same reinsurers who covered the damage from the Canterbury earthquakes, so again, it shows the reinsurers continue to trust our ability to manage the impact of natural hazards in New Zealand. We thank them for their ongoing support.
“All of that research feeds into loss modelling that EQC shares with its reinsurers to provide a New Zealand view of the natural hazard risks the scheme covers.
“This modelling enables New Zealand and the international insurance market to understand and quantify the risk underwritten by the scheme and provide confidence in underwriting any potential damages after an event.”
EQC’s Research and Resilience programme supports geologists, seismologists, volcanologists, engineers, statisticians, risk modellers and other experts at universities and agencies around the country.
“This research helps us to understand the risk our natural hazards pose, but more importantly, helps us to prepare and manage the impact of these natural hazards,” Miller added.
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