Reinsurers to cover 80% of NZ earthquake cost

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30 January 2012

Global reinsurers will cover around 80% of the cost of New Zealand’s February 22 earthquake, according to research by Swiss Re.

Swiss Re Senior Catastrophe Data Analyst Lucia Bevere say the country’s high take-up of earthquake cover means reinsurers will contribute significantly to the rebuilding.

Noting that insurance and other risk transfer mechanisms can greatly accelerate the recovery process, she says the insurance industry “is playing a key role in post-disaster financing of affected countries”.

But in its report, “Lessons from recent major earthquakes”, Swiss Re says New Zealand is unusual in its high penetration of earthquake cover and many quake-prone countries are underinsured.

For example, insurers contributed only 12-17% of the economic cost of the Japan earthquake.

New Zealand’s earthquake monitor GNS Science says the Canterbury earthquakes sequence is winding down, despite the magnitude 5.8-earthquake on December 23.

GNS earthquake scientist Kelvin Berryman says the tremors will start to decrease over coming months “and certainly we believe that a lot of the stress has already been released on the fault lines closer to the city”.

“We believe we are progressing into a period similar to after the February and June 2011 earthquakes. They will go on for some time but they will become undetectable over time.”

Dr Berryman says the size of ground shaking is decreasing. The December quake was only slightly above what scientists had predicted and there is low probability of a magnitude 7 event.