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China Taiping Insurance halts new cover in quake-prone Wellington, Canterbury

Thursday 31st May 2012

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China Taiping Insurance (NZ), the local unit of the Hong Kong exchange-listed insurer, has told brokers it won't underwrite any new business in Wellington or Canterbury as it clamps down on its criteria at the behest of reinsurers.

The insurer will "further tighten up the underwriting on our business" at the request of reinsurers, releasing a list of new guidelines for all new and renewed business, chief operating officer Peter Lam said in a letter to brokers. The new guidelines will apply to all policies from July 1.

The new rules include limiting the maximum sum insured to $6 million for any one risk, no new business in Wellington and Canterbury, no insurance for buildings built before 1950, no business for heritage buildings and buildings erected after 1982 must be support by a valuation report for replacement value.

The letter was released by Labour Party MP Lianne Dalziel, who said that China Taiping has a significant share of New Zealand-Chinese business, even if it isn't exposed to the local market to the same extent as other general insurers.

China Taiping had $5.1 million in net premium revenue in the 2010 calendar year, posting a profit of $719,000, according to the latest financial statements lodged with the Companies Office.

The insurer gets its reinsurance from a related company, Taiping Reinsurance.

The Hong Kong Exchange-listed shares of parent China Taiping Insurance Holdings fell 0.8 percent to HK$12.98, and have dropped 8.3 percent this year.

Earlier this month, the Reserve Bank said it expects reinsurance premiums will rise this year as global firms look to recoup the losses incurred from the Canterbury quakes, Japanese tsunami, Australian storms and Thailand floods. The bank said a large proportion of general insurers need to renew their reinsurance contracts for a July 1 start date.

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