Insurers look likely to foot 80 percent of the $20 billion price tag put on the Christchurch earthquakes, according to industry research.
Global reinsurer Swiss Re says the New Zealand insurance industry will cover about 80 percent of the overall cost of the Feb. 22 quake and 81 percent of the earlier September quake according to its internal database. That’s significantly higher than similar coverage for seismic events, and shows New Zealand has one of the highest rates of earthquake insurance penetration.
“The insurance industry is playing a key role in post-disaster financing of the countries affected,” said Lucia Bevere, Swiss Re senior catastrophe data analyst. “The low frequency of major earthquakes tends to create the perception that earthquake risk is low, even in places where there have been very deadly and damaging occurrence.”
In November, the Reserve Bank estimated the Canterbury quakes will result in claims worth some $30 billion as local firms seek to recover costs from interrupted business, temporary accommodation, inflation and other adjustments. Government officials have forecast the quakes caused more than $20 billion of damage to property in the region, though that predates the recent swarm of temblors since Christmas.
The Swiss Re research shows the insurance sector will only cover up to 17 percent of Japan’s March earthquake last year, while a February quake Chile will have about 27 percent of the US$30 billion in economic losses covered.
Worldwide seismic events between 2010 and 2011 caused economic losses of about US$276 billion and highly earthquake-prone countries remain underinsure, Swiss Re said.
The insurance industry will contribute just 1 percent to Haiti’s magnitude seven quake in 2010, which killed as estimated 316,000 people and caused economic losses of about $8 billion, while the 7.2 magnitude October quake in Turkey, which killed more than 600 people, will only receive a 4 percent contribution from insurers.