New Zealand’s Earthquake Commission (EQC) has increased its reinsurance program to $NZ6.2 billion ($5.9 billion) for the policy year that started this month.

The cover is up from $NZ5.55 billion ($5.2 billion) last year and $NZ4.83 billion ($4.6 billion) purchased for the 2017-18 year.

“Since the Canterbury earthquakes, EQC has more than doubled the amount of reinsurance purchased which demonstrates the confidence the market has in EQC,” CFO Chris Chainey said.

The reinsurance, arranged through broker Aon, has an excess of $NZ1.75 billion ($1.65 billion).

Below that level claims are paid from the Natural Disaster Fund, currently being rebuilt through EQC levies, while the state-owned insurer can also call on a government guarantee to ensure claims are paid.

“New Zealand is a very small player in the international reinsurance market in terms of premium spend,” Mr Chainey said. "However, EQC buys one of the largest catastrophe programs in the world.”

The reinsurance has only been used so far in relation to the Canterbury earthquakes, with reinsurers expected to contribute about $NZ4 billion ($3.8 billion) of the $NZ10-11 billion ($9.4-10.4 billion) that EQC may have to pay out to homeowners.

“Our reinsurance program is critical to providing cover to New Zealand homeowners for big events like the Canterbury earthquakes, so we’re very pleased our reinsurers continue to back us,” Mr Chainey said.

The EQC will provide residential building cover up to $NZ150,000 ($141,690) from July 1, up from the existing cap of $NZ100,000 ($94,461), but will no longer provides contents insurance, leaving that to the private market.

The maximum premium is also being raised to $NZ345 ($326) from $NZ276 ($261) under the changes, which will be phased in over the next 12 months.

The EQC’s cover applies for a range of natural disasters including earthquake.