The Earthquake Commission (EQC) has renewed its $6.2 billion reinsurance programme for the forthcoming year.

According to a statement from EQC, it has been purchasing reinsurance from international markets since 1988. This is to ensure that EQC is able to meet the costs of damage arising from large scale natural disasters such as earthquakes and volcanoes.

To date, EQC’s reinsurance has been used once, in relation to the Canterbury earthquakes. Reinsurers are expected to contribute around $4.6 billion of the more than $11 billion that EQC expects to pay out to homeowners when all claims are settled, the statement added.

“International reinsurers have again shown their ongoing confidence in New Zealand and the Earthquake Commission with this year’s agreement which commenced on June 01,” said EQC chief executive Sid Miller.

“The placement of the reinsurance programme is always a significant milestone for EQC and I am very pleased that we have managed to secure our full programme while managing the global impact of the COVID-19 pandemic on our process and partners.”

Aside from providing insurance, EQC has also made sizeable investments in natural hazards research and modelling. According to Miller, these help make clearer estimates of the financial impact of events and provide reinsurers with better understanding of the risks that they are underwriting.