Despite public criticism about the speed of rebuilding after the Canterbury earthquakes, “government, industry and community have made remarkable progress in the world’s most complex and proportionally largest natural disaster recovery”, Suncorp and RGA Reinsurance director Bill Bartlett says.

“The challenge for the insurance industry is to reframe the public discussion about what is an acceptable rate of recovery,” he told an Insurance Council of New Zealand seminar earlier this month.

Given the scale of the task “there is no ‘right’ pace”.

The 2010/11 quakes are transforming the New Zealand insurance market, and the resulting development up to 2020 must be viewed in three critical phases, the first of which is recovery, he says.

“Total damage is expected to be between $NZ20 billion and $NZ30 billion (($15.7-$23.6 billion), or 10-15% of NZ GDP.”

That compares with 4% for the Japanese earthquake and tsunami, Mr Bartlett says.

“Out of a total housing stock of 220,000, about 165,000 were uninhabitable or damaged. In the Christchurch CBD and suburbs, 1600 commercial buildings needed to be demolished.

“More than 30% of Christchurch businesses have been impacted and regional GDP fell an estimated 7% in the immediate aftermath of the earthquakes.”

The Earthquake Commission (EQC) is dealing with 415,000 building claims and 94,000 land claims, while private insurers are managing 130,000 claims.

Suncorp’s New Zealand subsidiary Vero is “focused on managing 19,000 commercial and domestic claims, preparing its response to the EQC Act review and reshaping its general insurance business to the new operating environment”, Mr Bartlett said.

In the medium term the review of the EQC Act is key, with the “hybrid” system involving the commission and private insurers “probably the major cause for complexity and a protracted recovery”.

The system needs significant reform to ease burdens on private insurers, he says. The review should consider “different models to finance, mitigate and manage major natural hazard disasters including earthquakes”.

“It is highly unlikely New Zealand will have more than 80% of the costs of any future natural… disaster met by insurers” and failure to address this will “curb the growth of a resilient and innovative general insurance sector here”, Mr Bartlett said.

In the longer term he says technology will dramatically change the industry. Consumers and insurers will have greater access to tools such as GPS, which can enhance understanding of risks in specific locations.

The move from physical assets to digital assets stored remotely in “cloud” format is changing insurance risk as “online purchases become ‘rights’, not tangible items”.

Smaller, better-secured and energy-efficient homes and cars and the new accommodation needs of changing relationship structures mean “insurers will need to search out opportunities to insure experiences or lifestyles”.

While the industry will benefit from greater risk data, it will also face consumers whose similar knowledge makes them well informed about their rights and pricing.