Insurance companies in New Zealand are set to reclaim NZ$694 million from the global reinsurance market for claims made in the wake of the 14th November magnitude 7.8 earthquake in Kaikoura, a total that is expected to rise further.
The Insurance Council of New Zealand had previously revealed that over NZ$900 million of commercial insurance claims had been filed due to the Kaikoura earthquake, but that figure will have risen significantly by now.
The expectation in the insurance and reinsurance market continues to be for a Kaikoura earthquake claims tally 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 reported that local insurers have provisionally estimated their reinsurance recoveries to-date at NZ$694 million (approx. US$485 million), which helped the country’s capital account balance reach a surplus of NZ$683 million for the December 2016 quarter.
That demonstrates the speed with which reinsurance recoveries can be understood and made, as insurers will already have received at least a portion of these payments.
The Kaikoura earthquake is one of the catastrophe events that hit 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 have already commuted losses on this event.
Given the length of the tail that became evident with losses from the Canterbury earthquakes, it could be some months before reinsurers understand their total exposure to Kaikoura.