Australian insurer Suncorp Group has revealed a further deterioration in its 2010 and 2011 Canterbury, New Zealand earthquake losses, increasing provisions by NZ$112 million (just over US$80m) with the majority to be passed on to its reinsurance providers.
Insurance industry losses from the Canterbury, New Zealand earthquakes have continued to creep higher, with a number of companies having increased provisions in the last year.
Suncorp has increased its loss tally significantly though, as new claims from the New Zealand Earthquake Commission have come in, raising its previous total by NZ$112 million, with the majority passed to reinsurers and Suncorp keeping just NZ$18 million.
The increase is largely due to over-cap claims from the Earthquake Commission, where claims are over $100,000. These larger, often more complex claims have been a major cause of loss creep for insurers exposed to the Canterbury quakes and reinsurance capital has ultimately been the source of capacity that bears the majority of the rising claims cost.
On the more recent earthquake in Kaikoura, New Zealand, Suncorp said that it expects around NZ$50 million for that quake event.
This, as well as other claims from storms in Australia, has helped to drive Suncorp Group’s catastrophe losses over budget once again in the second-half of 2016.
“For the six months to 31 December 2016, natural hazard claims costs in Australia and New Zealand are estimated to be $350 million, $40 million above the natural hazard allowance of $310 million,” the company explained this morning.
Suncorp has exceeded its natural catastrophe budget every half-year since 2013, reflecting the catastrophe and severe weather exposed nature of the Australia and New Zealand region.
As well as the Kaikoura earthquake, other major claims in the second-half of the year include $60 million for storms in South Australia and Victorian in November 2016 and $50 million for storms in the same region in December 2016.
The rising claims from the Canterbury quakes continues to hit reinsurance capital, however the majority of ILS funds and collateralised reinsurers are likely to have commuted their responsibilities some years ago. But, again, this event provides a very good example of catastrophe claims taking a significant time to resolve, reinforcing the fact that earthquake losses can be far from short-tailed.