New EQC cap to make natural disaster insurance more affordable
Minister Responsible for the Earthquake Commission, Dr David Clark has announced today the Government will increase the amount of insurance risk taken on by the Earthquake Commission (EQC), progressing a further recommendation of Dame Silvia Cartwright’s 2018 public inquiry into the crown entity.
“COVID has shown us how important it is to have the appropriate support available when disaster strikes. We want New Zealanders to have access to affordable residential property insurance, to ensure as many people as possible can repair their homes if they are damaged by a natural disaster,” David Clark said.
Beginning 1 October 2022, EQC will cover the first $300,000 of damage caused by earthquakes, tsunamis, volcanic eruptions, hydrothermal activity and natural landslips. Private insurers cover damage above the EQC cap, which is currently set at $150,000.
“We are providing more natural disaster cover for homeowners, ensuring their private insurance cover remains available and affordable,” David Clark said.
“In recent years insurers have moved to a risk-based pricing for earthquakes, making the cost of insurance more expensive for homeowners in areas like Wellington, Hawke’s Bay and Canterbury. Increasing the EQC cap should lead to reduced premiums for many New Zealanders as the Crown absorbs some liability and risk from private insurers.
“This change means the Government, through EQC, will take on a greater portion of risk - I’d expect to see insurers reflect this in their pricing for residential property insurance purchased by New Zealanders after October 2022.
“The intention of the inquiry, which was led by Dame Silvia Cartwright, was to examine the role and work of the commission in the aftermath of recent natural disasters dating right back to the 2011 Canterbury earthquake.
“New Zealand has one of the highest levels of residential property insurance in the world and we want to see this continue. We know from the Canterbury earthquake how important insurance is in helping communities to get back on their feet,” David Clark said.