The recent earthquake in Christchurch, New Zealand on September 4th which registered Mw7.0 on the Richter scale has been cited as the most damaging the country has seen in years. It is estimated that the quake may have damaged as many as 100,000 of the 160,000 homes in the city.
AIR Worldwide has released its estimates on the insured losses which can be expected from this disaster. AIR Worldwide state that industry insured losses will be between $2b and $4.5b U.S. dollars. EQECAT stated expected insured losses of $1b-$4b in its initial statement on the disaster.
Losses are uncertain and likely to rise given the extent of the damage to buildings. AIR says that gale force winds forecast and aftershocks could cause additional stress on already weakened buildings in the area.
New Zealand experiences many earthquakes each year, around 14,000 in total, but on average only 20 have a magnitude in excess of 5.0 making this an unusually large one.
Insurance Australia Group who rank as the largest general insurer in New Zealand says that it expects its claim costs will be entirely covered by its reinsurance arrangements. Analysts say that large, global reinsurers such as Swiss Re and Munich Re will end up bearing the brunt of the losses although the NZ EQ Commission has a disaster fund which will also be helping people affected by the earthquake.