Comments suggesting a potential withdrawal of reinsurance from the New Zealand market due to earthquake risk are no cause for alarm, according to the Insurance Council of New Zealand (ICNZ).

Munich Re GM Non-Life Scott Hawkins told an ICNZ seminar last week that cover could be withdrawn if further significant events hit the nation.

The seminar focused on the issue of internal fitout failure during earthquakes, using Wellington as a case study.

ICNZ CEO Tim Grafton told insuranceNEWS.com.au Mr Hawkins’ comments were meant to imply what could happen if no action to improve building resilience is taken.

“We have no indication from reinsurers of a withdrawal from the New Zealand market,” he said.

“But given the earthquake-prone nature of Wellington, it is absolutely important for Wellington properties to become more resilient, and an awful lot is going on to make that happen. The Kaikoura quake [last year] led to significant costs in Wellington, and even some recent constructions have become total losses.”

Mr Grafton says the issue of internal fitouts remains a problem.

“A lot of damage occurs from the failure of non-structural seismic restraints. Things such as sprinkler systems and air-conditioning ducts can cause an awful lot of problems.”