US reinsurance and investment giant Berkshire Hathaway is to provide earthquake cover in the Christchurch region after obtaining a New Zealand insurance licence.

In its November Financial Stability Report the Reserve Bank of New Zealand says Berkshire Hathaway, through a UK subsidiary, “intends to provide earthquake cover for construction in Canterbury”.

The bank also reports new property insurance in Christchurch and nearby “is becoming more available. Some insurers have relaxed their underwriting constraints and further improvements are anticipated in the absence of any major aftershocks.”

Berkshire Hathaway’s move comes after leading local insurers tied up with commercial banks to provide construction insurance and finance in Canterbury.

While cover is increasingly available in the region it is expensive, with reinsurance rate rises of 25% to 30% leading to policy costs increasing by as much as 50%.

The Reserve Bank acknowledges this trend, saying in the report that property insurance premiums “are still increasing nationwide” and that terms are tightening leading to increased excesses, lower limits, and a change from open-ended to capped replacement cover on household policies.

The bank also says payouts for the Canterbury earthquakes now total about $NZ10.8 billion ($8.45 billion) with $NZ3.8 billion ($2.97 billion) provided by the Earthquake Commission and $NZ7 billion ($5.48 billion) from private insurers.

Total claims costs have risen $NZ1.5 billion ($1.17 billion) since May and are expected to top $NZ30 billion ($23.49 billion).