New Zealand’s Earthquake Commission (EQC) has renewed its $NZ6.2 billion ($5.8 billion) reinsurance, continuing one of the world’s largest annual programs.

EQC CEO Sid Miller says international reinsurers have shown their ongoing confidence in New Zealand with the latest agreement.

“The placement of the reinsurance program is always a significant milestone for EQC and I am very pleased that we have managed to secure our full program while managing the global impact of the COVID-19 pandemic on our process and partners,” he said today.

The latest program, in place from the start of the month, was arranged through broker Aon.

Cover has been maintained at the same level as last year after it was escalated from $NZ5.55 billion ($5.2 billion) in 2018 and $NZ4.83 billion ($4.53 billion) in 2017.

EQC has purchased reinsurance from international markets since 1988 to meet costs for natural disasters including earthquakes and volcanic eruptions, paying more than $NZ2 billion ($1.9 billion) in premium over that time.

To date, the program has only been used for the Canterbury earthquakes, with today’s update showing reinsurers are now expected to contribute around $NZ4.6 billion ($4.3 billion) of the more than $NZ11 billion ($10.3 billion) that EQC expects to pay out to homeowners when all claims are settled.

Mr Miller says New Zealand is exposed to high levels of natural hazards and EQC and Aon work hard to build confidence in the country and maintain access to reinsurance.

“EQC’s ongoing investment in natural hazards research and modelling to estimate the financial impact of events all help provide reinsurers with a high level of understanding of the risks that they are underwriting,” he said.

The excess on this year’s reinsurance is $NZ1.75 billion ($1.64 billion), CFO Fraser Gardiner told insuranceNEWS.com.au, the same level as last year.

“EQC was pleased with the outcome of its reinsurance placement with pricing in line with our expectations particularly given the evolving COVID-19 situation,” he said.

Reinsurance is the single largest annual operating cost incurred by EQC. The insurer’s 2018/19 annual report shows it paid a reinsurance premium of $NZ180.7 million ($169.3 million) and received earned premium of $NZ386.6 million ($362.3 million).