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Canterbury reinsurance claims a third of the way through, RBNZ says

Wednesday 7th November 2012

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Insurance claims for the spate of Canterbury earthquakes are about a third of the way through with $10.8 billion paid out, according to the Reserve Bank.

The Earthquake Commission has paid $3.8 billion in claims and other insurers have met $7 billion of claims, in what's estimated to be a bill in excess of $30 billion, the central bank said in its twice-yearly financial stability report.

"Many significant issues affecting insurance claims are yet to be resolved and uncertainty about the total insurance claim cost estimate remains high with an approximate $10 billion difference between the upper and lower bound estimates used by the Reserve Bank," the report said.

The swarm of quakes devastated New Zealand's second-biggest city and have led to increased premiums for customers around the country as insurers faced bigger reinsurance bills, and caused greater demands for building standards across the nation.

The Reserve Bank said new property insurance is becoming more available in Christchurch, with some insurers relaxing their underwriting constraints.

"Further improvements are anticipated in the absence of any major aftershocks," the bank said.

Berkshire Hathaway International Insurance has recently obtained an insurance licence and intends to provide earthquake cover for construction in Canterbury.

The bank is considering a policy position on reinsurance agreements that may have a financing element and whether that could breach solvency capital requirements for insurers. It expects to undertake public consultation soon, it said.

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