New Zealand based primary insurance firm Vero, a subsidiary of the Suncorp Group, expects its “strong reinsurance arrangements” will cover “all expected claims” from the recent earthquake that struck the Kaikoura area.
Vero, which has reported receiving over 1,000 claims from the magnitude 7.8 quake already, is now the second of New Zealand’s large primary insurers to say that the majority of its losses from the earthquake would be covered by the global reinsurance market.
Since the latest New Zealand earthquake event Artemis has had it confirmed, by more than one manager of insurance-linked ILS funds, that there is a chance of some minor losses falling to the ILS market through collateralised reinsurance and retrocession contracts.
So far the clearest sign of the size of the insurance industry loss from the New Zealand quake comes from AIR Worldwide’s estimate which it put in a range from as low as US$762 million to as high as US$3.5 billion.
Local insurers tend to have very low deductibles and retention from earthquake related losses, with their reinsurance programs kicking in to support claims payment very quickly. The New Zealand Earthquake Commission (EQC) has a retention of around $1 billion per event and so there is a good chance of the state-backed insurer also calling on its reinsurers for support, as we explained in more detail here.
Vero joins insurer Tower Group in suggesting that reinsurance capital will pay for the majority of the claims it eventually pays for the earthquake.
Tower Group said that it has over $700 million of cover once its retention of NZ$10 million is passed.
Vero’s Executive General Manager of Claims, Jimmy Higgins, said that it remains too soon to estimate the companies exposure to the quake, but that Vero “has strong reinsurance arrangements in place to cover all expected claims.”
According to reports there are still investigations ongoing to assess the structural stability of a number of commercial buildings in Wellington and other towns, while some buildings have already been evacuated and ear-marked for demolition.
That suggests that the eventual industry loss from the recent November 14th Kaikoura earthquake could perhaps be higher than expected.