Reinsurance market shows confidence in EQC scheme

Te Whanganui-a-Tara - The international reinsurance world continues to show strong support and confidence in New Zealand’s national hazard insurance scheme in a challenging reinsurance market, Toka Tū Ake EQC says.

The insurance world has continued to absorb losses from natural disasters such as wildfires, floods and storms all over the world in the past year, so when we were in Europe, EQC says.

Reinsurers recognise Toka Tū Ake EQC for the wide range of perils it covers and that this supports the broad uptake of home insurance across our high-risk country, which in turn spreads the risks for reinsurers.

The core purpose of the EQC scheme is affordable insurance which enables over 90 percent of New Zealanders access to home insurance, which is unheard of in other high-risk countries.

Toka Tū Ake EQC’s reinsurance carries an excess of $1.75 billion, which means that most natural hazard events are paid out by the natural disaster fund, which is funded through homeowners’ EQC levies from their home insurance and underpins the EQC scheme.

The only time EQC had to call on its reinsurance was in Canterbury and the main reason to have reinsurance is for a significant but less frequent events.

The Lloyd’s market has been a long-term supporter of the Toka Tū Ake EQC, providing significant reinsurance capital following the Canterbury earthquakes and continues to be an important source of capacity for the programme.

The cost of catastrophe insurance for homeowners in other high-risk countries can cost up thousands a year, if it is even possible, compared to the $480 a year New Zealanders will pay for EQCover even with the EQC cap doubled to $300,000.

The cost in other countries can be  prohibitively high and means there is much lower insurance uptake than in New Zealand.

Aotearoa is fortunate to have a national scheme where everyone pays the same rate for a range of natural hazards.

Photo: The main trading hall at Lloyds in London, featuring the Lutine Bell which now only rung on special occasions, most recently to mark the passing of Queen Elizabeth.