EQC to take on greater amount of catastrophe risk

EQC to take on greater amount of catastrophe risk | Insurance Business New Zealand

EQC to take on greater amount of catastrophe risk

The New Zealand government has doubled the amount of insurance risk taken on by the Earthquake Commission (EQC) from earthquakes and other natural disasters.

David Clark (pictured above), minister responsible for EQC, announced that EQC will cover the first $300,000 of damage caused by earthquakes, tsunamis, volcanic eruptions, hydrothermal activity and natural landslips, beginning October 01, 2022. The previous limit was $150,000. Private insurers will cover damage above the EQC cap.

“We are providing more natural disaster cover for homeowners, ensuring their private insurance cover remains available and affordable,” Clark said. “In recent years insurers have moved to a risk-based pricing for earthquakes, making the cost of insurance more expensive for homeowners in areas like Wellington, Hawke’s Bay and Canterbury. Increasing the EQC cap should lead to reduced premiums for many New Zealanders as the Crown absorbs some liability and risk from private insurers.”

The move is part of the government’s response to the recommendations forwarded by the 2018 public inquiry into EQC, led by Dame Silvia Cartwright. The inquiry examined EQC’s role in the aftermath of disasters, dating back to the 2011 Canterbury earthquakes.

“New Zealand has one of the highest levels of residential property insurance in the world and we want to see this continue,” Clark said. “We know from the Canterbury earthquake how important insurance is in helping communities to get back on their feet.”