Continued quakes in New Zealand could have long term effects on insurability
New Zealand has been devastated by earthquakes, especially in the Canterbury Region which includes Christchurch, the country’s second-largest city.
In September 2010, a magnitude 7.0 quake ravaged the city. Five months later, on February 21, a magnitude 6.1 earthquake hit the region. On June 13, a magnitude 6.0 event occurred again near Christchurch, the latest in a series of quakes and large aftershocks.
The Insurance Council of New Zealand says that the continuing aftershocks raise the level of risk seen in New Zealand and may have a “significant impact” on insurance and reinsurance policies in the future.
“The impact may see increases in premiums and excesses, or even a questioning of the level of insurability for earthquakes that New Zealand receives,” the Council said in a statement.
The country’s insurance industry says that many buildings already under repair were again destroyed by the aftershock and this will require a further approach by insurers through their builders to the insured parties, to ensure that buildings are repaired. But earthquake protection will now be set internationally.
“New Zealand’s earthquake insurance future will be decided by reinsurers’ in boardrooms on the other side of the world,” said the Council.
The insurance industry is now gearing up and expects to pay at least $NZ10 billion (CAD $7.9 billion) into the Canterbury economy and the rebuilding of Canterbury and Christchurch. However, over a hundred extra commercial buildings were destroyed in the latest quakes and costs will rise.
The insurance industry however, says that the future is now being re-assessed by reinsurers and insurers and there are likely to be long term and significant changes to insurance in New Zealand when it comes to the writing of policies and covering of risks like earthquake.
