Ace Insurance (NZ) is scaling back its exposure to commercial property risks in NZ due to the potential for a big earthquake in the Wellington region.

The Auckland-based insurer has closed its Christchurch office, with the loss of three jobs. The office, which opened in March last year, dealt mainly with commercial property business. The Wellington office is being scaled back this month to just two staff.

MD Michael Poole told New Zealand news service Stuff the risk of an 8.5 magnitude earthquake devastating the Wellington CBD prompted the company to withdraw from that market.

“We have got far too much in the Wellington area for the amount of capital that the group wants to put up or allocate to NZ,” he said. “They [Ace regional management] are not prepared to expose that much of the group’s capital for a big hit in Wellington.”

Insurance Council of New Zealand CEO Chris Ryan told Sunrise Exchange News insurers are now more aware of catastrophe risks generally, “although I’m not aware of any significant change in attitude about Wellington or NZ as particular earthquake risks”.

Mr Ryan says the move isn’t significant from an industry viewpoint. “When these situations occur and one insurer decides not to cover a risk, another one will move in and fill the gap.”