Insuring the insurers: Record package secured to cover disaster claims

At a time of increasing concern about rising insurance costs following events such as floods, the Natural Hazards Commission (NHC) has secured a record-breaking $12.3 billion in reinsurance protection.

Described as “effectively insurance for insurers”, the funds come from international entities, and will go towards settling claims in the aftermath of increasingly destructive events. Speaking to rova, NHC Chief Executive Tina Mitchell explained just how vital it is to have this money available.

“We're really pleased because an important part of our job is making sure that we've got the financial backstop there to give New Zealanders peace of mind that their claims would be paid if there was a significant event.

"We have two million homes within the natural hazards scheme right across the country, and a disaster could happen anywhere, at any time. Reinsurance is a really important part of making sure that there are funds available to go across all of the claims.”

Along with being a $2.1 billion increase on last year, the Crown entity says it was able to obtain the funds on a more cost-effective basis, which Mitchell describes as proof of just how solid the wider programme is:

“We collect a levy from every insured homeowner to pay for it, and are very disciplined and careful when we go out to buy this financial protection.

"Global markets have a choice on who they want to back. They have really strong confidence in New Zealand. It's one of those areas where we're punching above our weight because we invest in science and research. We understand what our risks are and we're really transparent about those.

"It's important for people’s peace of mind that they know that, even though we live in a risky country, there are funds available if their home should be damaged, that they can make a claim and it will be met.”