The New Zealand government statistical department has increased its estimate of the reinsurance recovery due to insurance companies in the country, raising it from NZ$694 million at the end of 2016 to NZ$814 million at the end of March 2017.
The earthquake struck the Kaikoura area of New Zealand on the 14th November at magnitude 7.8, causing widespread damage to property and infrastructure.
The expectation in the insurance and reinsurance market remains for the total Kaikoura earthquake industry loss to reach as high as NZ$5 billion or US$3.5 billion, with a significant proportion of that toll expected to be from business interruption claims.
The government of New Zealand’s statistical department previously reported that local insurers had estimated their potential reinsurance recoveries from the quake at NZ$694 million (approx. US$485 million) as of the end of the December 2016 quarter.
But now in the statistical agencies latest update that figure has been increased to NZ$814 million (around $595 million), but as of the 31st March 2017 only $19 million of those claims had been settled with overseas reinsurance firms, the agency reports, leaving $795 million of claims still outstanding at that time.
The Kaikoura earthquake is one of the catastrophe events that hit certain ILS funds and collateralised reinsurance vehicles during 2016. The final extent of any losses to ILS fund vehicles won’t be fully understood until the insurance industry loss is finalised, although we do understand that some had rapidly commuted losses on this event that proved to be merely attritional.
So the size of the reinsurance recovery expected by insurers in New Zealand grew during the first-quarter of the year. It will be interesting to see whether this figure continues to develop, as there are certain to be further losses due to business interruption linked to the Kaikoura quake, but it’s uncertain whether that could inflate the reinsurance sector impact at this time.
Only a month left until our ILS Asia 2017 conference, tickets on sale here.