New Zealand’s Earthquake Commission has confirmed full placement of its $NZ3.25 billion ($2.77 billion) reinsurance program at rates “similar to last year”.

The placement was 10% oversubscribed and up from $NZ2.5 billion ($2.13 billion) in the previous program.

The cover cost an unprecedented $NZ160 million ($136.33 million). There is provision for one reinstatement, giving up to $NZ6.5 billion ($5.54 billion) of reinsurance cover in one year.

The flat rates are a relief, CEO Ian Simpson says.

“We have had significant increases since the Canterbury earthquakes and it is good to reach an equilibrium,” he told insuranceNEWS.com.au.

The rates are a reflection of the way the recovery is being run, he says. “Things have also settled down from a seismic perspective and there is a lot of capacity out there.”

Cover is now in place “to meet the costs of a significant disaster, although perhaps not at the levels experienced in Canterbury”.

Mr Simpson says support from international reinsurers is an “essential underpinning” of New Zealand’s insurance market, and reinsurer confidence has been bolstered by the commission’s commitment to transparency.

“In the past couple of years we have dealt with a number of situations that are entirely unique in insurance history,” he said. “These include land damage due to liquefaction and the associated need to undertake extensive geotechnical investigations.

“The requirement to apportion each claim to an event, given that there was a series of very damaging earthquakes in Canterbury, has been frustrating for customers and it has been administratively challenging.

“But if we had fallen short on these obligations, there could have been a substantial long-term impact on the entire New Zealand insurance market.”

The commission has received 467,000 claims from 736,000 building, land and contents exposures – making Canterbury one of the largest-ever insured events.