Thursday 10th November 2011
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Insurers are expecting claims worth some $30 billion and counting from the Canterbury earthquakes that levelled parts of the nation’s biggest city and killed 181 people, the Reserve Bank says.
The quakes are expected to cost insurers more than the $20 billion estimated cost of damage to Christchurch property as the firms pick up the tab for interrupted business, temporary accommodation, inflation and other adjustments, according to the Reserve Bank’s latest financial stability report.
“The final cost will only be known once all claims have been settled, which could be some years away,” the report said.
The quakes have caused global insurance companies to inject capital into their New Zealand subsidiaries, and prompted the government to put up a $500 million rescue package for Christchurch-based AMI, which is struggling to meet the large value of claims.
The disasters have prompted insurers to limit the availability of new premium cover for earthquake events, and the Reserve Bank said owners of some earthquake-prone buildings and infrastructure can’t get cover anywhere in New Zealand.
The Reserve Bank will assume full supervision of the insurance sector form March next year, and will introduce solvency and capital requirements for all insurers, as well as introducing a licensing regime.
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