New Zealand’s Earthquake Commission (EQC) has collated a record high $NZ7.2 billion ($6.46 billion) of reinsurance funding from international providers.

A $NZ470 million ($421.55 million) increase from last year means the government entity has increased its reinsurance by $NZ1.2 billion ($1.08 billion) in the past two years.

EQC CEO Tina Mitchell says the record level of funds enables EQC to continue to provide New Zealand homeowners with access to affordable and appropriate prices.

“We are grateful for the ongoing support of our long-standing reinsurance partners, particularly as the reinsurance markets have hardened significantly over the past few months,” Ms Mitchell said.

“This financial backing is one of the key benefits the EQC scheme delivers for New Zealand homeowners – it ensures natural hazard home insurance is accessible and reasonably priced despite the hazards we live with in New Zealand.”

The reinsurance market has experienced a turbulent number of years, with an uptick in catastrophic climate events in addition to pressures from Covid-19 and the Ukrainian conflict causing significant losses for reinsurers.

“In our discussions with the reinsurance companies, it became clear that all these factors have impacted their appetite for providing property insurance for natural disasters,” Ms Mitchell said.

“The EQC model is unique in the world and, even in those challenging conditions, it continues to be well supported by global insurers.”

Ms Mitchell says the EQC’s investment in quality research and modelling gave reinsurers confidence when assessing the risks of insuring.

“Despite living in a country with a variety of natural hazards, we are really proud that our investments in world-class research and modelling gives reinsurers confidence in the risks they are insuring and what we are doing as a country to understand and manage our risks,” Ms Mitchell said.

“Attracting this support is definitely a case of New Zealand punching above its weight on the global stage.”

The New Zealand Government announced that from October 1, the EQC’s cap for claims will double from $NZ150,000 ($134,537) to $NZ300,000 ($269,074).

Ms Mitchell says that despite the significant increase, the EQC did not need to double its reinsurance fund.

“The large majority of expected EQC claims sits within the original cap, so any increase will support the anticipated small number of homes that suffer damage above $150,000.”

EQC expects to continue negotiating with reinsurers to maintain affordable insurance prices for homeowners.