New Zealand’s second-biggest insurer, Vero, is regaining confidence in the market, with CEO Gary Dransfield telling a business audience in Christchurch the company is “planning to widen our risk appetite”.

“As our confidence increases and seismic activity decreases we will consider increases in earthquake sums insured for existing Vero customers in line with normal valuation and inflation rises,” he said.

However, Mr Dransfield says the New Zealand insurance industry must work hard to ensure the future availability of insurance in the country.

It needs to complete the current earthquake claims “in a customer-responsive and cost-effective manner and improve the ability to assess the risk of providing cover in seismically active areas”.

He says the result will be more expensive policies as “enhanced risk assessment and moves to recover some of the substantial increases in reinsurance and claims costs inevitably lead to higher premiums and changed underwriting provisions”.

“Both reinsurance and insurance will continue to be available for New Zealand, and that reflects confidence that the massive claims volume will be progressively reduced,” Mr Dransfield said.

However, conditions on policies will need to change and “there will be a rebalancing of risks incurred by insurers, customers and government”.

He says improved building designs meeting stricter codes “lessens the insurance risks and increases the probability of insurance availability”.

The Christchurch earthquakes “will also pave the way for changes in the way New Zealand thinks about the funding of disaster protection, the mitigation of the impacts of disasters and the effective management of disasters after they occur”.

Vero is managing about 19,000 domestic and commercial claims from five New Zealand earthquakes in 2010 and last year.

“We have completed more than 30% of our claims and paid out nearly $NZ1.5 billion ($1.16 billion) to customers,” Mr Dransfield said.

The company is currently paying out abut $NZ80 million ($62.12 million) a month in claims.