The New Zealand Natural Hazards Commission (Toka Tū Ake), formerly known as the Earthquake Commission (EQC), has announced an increase in its reinsurance cover to $6.2 billion. This move is part of an ongoing effort to enhance the financial resilience of New Zealand homeowners against the growing threat of natural disasters.
The newly increased reinsurance package represents a significant increment from previous years and incorporates funding from a catastrophe bond placed on the market. The Commission's reinsurance strategy comes after lessons learned from prior events, where international reinsurers played a crucial role in the recovery process following major natural disasters.
The Commission funds its obligations through the collection of levies from homeowners nationwide. A portion of these levies is allocated specifically to reinsurance, which acts as insurance for insurers, ensuring claims for natural hazard damage can be met even in extreme scenarios. This approach forms the backbone of New Zealand’s internationally recognised national insurance scheme.
Continuous investment in research and modeling has enabled the Commission to present reinsurers with a transparent and data-driven understanding of New Zealand's risk profile. This transparency has, in turn, fortified the confidence of global reinsurers in New Zealand’s natural hazard insurance system.
Significant legislative changes also took effect on July 1, when the entity formerly known as the EQC was renamed the Natural Hazards Commission. The new legal framework better reflects its expanded mandate, extending the scope of the Commission from a primary focus on earthquakes to a broader range of natural hazards. These reforms incorporated lessons from past disasters and the outcomes of official reviews, resulting in a modernised, comprehensive approach to natural hazard risk protection.
This evolution in mandate and naming has also led to updates in the insurance products offered, aligning with the Commission’s renewed branding and legislative foundation. The information disseminated by the Commission is intended for general knowledge regarding its reinsurance programme and natural hazard insurance, not as specific insurance advice. Homeowners are encouraged to seek professional counsel when making insurance-related decisions.
The steady expansion of the reinsurance programme reflects a proactive approach to the changing landscape of natural hazards. In 2019, the EQC secured $6.2 billion in coverage, according to the Commission’s official announcement. Despite international uncertainties during the COVID-19 pandemic, this level was maintained in 2020 (source). The subsequent years saw an increase to nearly $7 billion in 2021 (source), $7.2 billion in 2022, and a record $9.2 billion in 2024, which included $225 million secured through a multi-year catastrophe bond in 2023 (source).
These strategic increases in reinsurance coverage underscore the Natural Hazards Commission’s commitment to safeguarding New Zealand homeowners and ensuring the continued affordability of home insurance in the context of rising and evolving natural hazard risks. More details on the recent announcement can be found in the original article on Yahoo Finance.