IAG has increased its catastrophe reinsurance program this year, while also revising its final claims costs from the Canterbury earthquakes.

The insurer says its reinsurance protection of up to $7 billion from January 1 takes into account last year’s acquisition of Wesfarmers’ business. Its catastrophe reinsurance cover for last year was $5.6 billion.

The company says final claims costs from the 2011 Canterbury quakes will probably be between $NZ750 million and $NZ1 billion ($697 million and $929 million) above its previous estimate of $NZ3.25 billion ($3.04 billion).

The revision reflects “an increase in forecast repair and rebuild costs” and new household claims exceeding the $NZ100,000 ($92,930) cap covered by New Zealand’s Earthquake Commission.

A series of “adverse” court judgements affecting the insurance industry in the past six months have also contributed to the rise in final claims costs.

The group’s New Zealand operation boosted its catastrophe reinsurance by $NZ220 million ($205 million) last year to satisfy the requirements of the regulator, the Reserve Bank of NZ.

IAG’s financial statements published in December said the shortfall was a result of a misinterpretation of the solvency standards and reinsurance requirements, and additional reinsurance was immediately purchased.

Meanwhile, Tom Pockett has been appointed to the IAG board as a non-executive director. He replaces Peter Bush, who retired on January 1.