New Zealand’s Natural Hazards Commission (NHC), formerly known as the Earthquake Commission (EQC), has expanded its reinsurance program to NZ$10.3 billion.
The increase is intended to reinforce the country’s financial preparedness for natural disasters, according to the commission.
The new reinsurance level is NZ$1.15 billion higher than the previous year and includes NZ$225 million from a multi-year catastrophe bond that was issued in 2023. The NHC last drew on its reinsurance following the Canterbury earthquakes, when reinsurers contributed about NZ$5 billion to recovery costs.
NHC CEO Tina Mitchell (pictured above) said reinsurance plays a key role in the commission’s financial strategy. One method for ensuring claims for natural hazard damage can be paid is through reinsurance, which she described as “insurance for insurers.”
Mitchell explained that all insured homeowners in New Zealand contribute levies to the national scheme, and part of those funds is allocated to purchase reinsurance cover.
“The scheme is held in very high regard globally. Our long-term investment in research and modelling means we can give reinsurers a transparent understanding of the risks they are insuring,” Mitchell said.
The total expenditure for reinsurance protection increased to NZ$414 million for the 2024-25 financial year, up from NZ$286 million the previous year. The NHC said the higher cost reflects current global reinsurance pricing trends and the commission’s effort to maintain adequate capacity in response to growing exposure from climate-related risks and urban expansion.
Under the NHCover product, the commission covers up to NZ$345,000 (including GST) for residential buildings, with the balance covered by private insurers. This coverage applies to the dwelling itself and is triggered by damage caused by eligible natural hazards.
The NHC's layer of protection serves as the first response in a layered insurance arrangement, easing the claims burden on the private sector.
The increased coverage follows regulatory reforms under the Natural Hazards Insurance Act 2023, which took effect on July 1, 2024. The act replaces the Earthquake Commission Act 1993 and establishes an updated legal and operational framework based on lessons from past earthquakes and the recommendations of the 2020 Public Inquiry into the EQC.
The changes broaden the NHC’s mandate beyond earthquakes to encompass a wider range of natural hazards. In line with the new legislation, the EQCover insurance product has been renamed NHCover, and the Natural Disaster Fund has been rebranded as the Natural Hazard Fund.
A key feature of the updated framework is the continued backing of the Natural Hazard Fund by a Crown guarantee. This provision ensures that if the fund's resources are exhausted in a major disaster event, the New Zealand government is obligated to meet any shortfall in claim payments.
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