We're sorry but your browser is not supported by Marsh.com

For the best experience, please upgrade to a supported browser:

X

Insurer response to North Canterbury earthquakes

 


As a result of the North Canterbury earthquakes, where the initial claims estimates are in excess of $5 billion, the general property and construction insurance market conditions in New Zealand have immediately changed.

The majority of insurers have ceased writing any new business or increasing their exposures in certain regions. Insurers will continue to review and reduce the number of affected  zones over the coming weeks, provided there are no more significant events.

The performance of a number of commercial buildings in Wellington affected by the earthquakes has led to insurers becoming quite cautious about taking on risks that may already be subject to damage.

Marsh has considerable experience working closely with clients to provide help and guidance with the preparation and negotiation of insurance claims through our Claims Advocacy team.  If you require any assistance or clarification about your policy coverage, and what’s required to successfully lodge your claim, you should contact your client executive or our Claims Advocacy team.

From a proactive stance, having a Marsh risk consultant assess your property and business interruption exposures would be a prudent step in the current insurance  environment .

The global context

While the New Zealand insurance market is currently in period of change there are no immediate issues facing the global insurance market. We are, however, seeing signs of a slowdown in property premium rate reductions from the international market. We anticipate that property pricing will remain flat through 2017 with the exception of those risks in zones impacted by the recent North Canterbury events.

The Brexit decision is expected to have minimal impact on the pricing or availability of insurance at this time. Brexit is adding some uncertainty in respect of operational costs for larger global insurers who are becoming cautious about the potential for major natural catastrophes.  

One of the more localised technical factors is the release of a revised earthquake modelling tool known as the RMS HD Model, which incorporates many of the important lessons learnt from the Canterbury earthquake and is utilised by most insurers locally and globally. The tool is likely to predict higher levels of exposure to earthquake and insurers are likely to seek to incorporate this into their pricing over time.

Insurer focus remains on achieving a balanced portfolio with strong underwriting practices. Clients who are able to differentiate the quality of their risk through good underwriting information, detailed risk engineering surveys and positive claims record are well placed to achieve the best premium and cover outcomes.