Claims Affecting Reinsurance Costs
After the 2010 Canterbury quake, it was expected that New Zealand insurers would face rate increases of more than 10% for the renewal of their insurance during 2011. Estimates from the world's largest reinsurer Munich Re put the claim bill faced by the reinsurers from the 2010 Canterbury earthquake at US$600 million, nearly US$200 million higher than initial estimates. This does not include the EQC exposure of NZ$1.5 billion.
Munich Re board member Dr Ludger Arnoldussen, who was in New Zealand to speak with insurers, praised the efforts of those companies which handled the claims and the stringent building standards that were in place in New Zealand. Arnoldussen said the expected hike in rates was also likely to translate to higher premiums for policy holders, the extent of which would depend on how much risk the individual companies were prepared to carry. Meanwhile figures show the number of catastrophic events in New Zealand quadrupled in the 30 years to 2010, and that 90% of all insured claims during that period were the result of geophysical events. However rates would remain well below those in California, with policy holders there on average paying about 15 times more than in New Zealand, he said.
Read more about this topic: Earthquake Commission
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