Most insurers with claims from the Christchurch earthquake will not exceed their reinsurance limits, according to a new report on the event by Aon Benfield.

“Because of the natural peril and demographic distribution in NZ, many insurers purchase catastrophe protections based on a scenario approach rather than on a return period basis,” the report says. 

“The key event monitored is a Wellington earthquake, which couples a high natural peril risk with a high population and has a recurrence period of about 700 years.”

Head of Aon Benfield Analytics in Australia/NZ Ben Miliauskas says based on initial reports there has been no need to change any earthquake modelling for NZ.

“While the earthquake occurred in a new location, it wasn’t inconceivable given how seismically active NZ is,” he said.

“Because of the natural peril and demographic distribution in NZ, many insurers purchase catastrophe protection using a scenario approach.”

Mr Miliauskas says most NZ insurers have purchased catastrophe insurance at a level higher than international standards.

“For most clients, the Christchurch earthquake will impact their catastrophe reinsurance programs to a lower to mid-layer at best,” he said.

According to Aon’s report, most residential damage was to masonry construction and chimneys collapsing.

In the CBD, 90 buildings are reported to be damaged, with facades falling away and metal awnings collapsed.

It says one of the reasons behind the number of claims is the fact that Christchurch is built on gravel and silt deposits which are waterlogged from numerous local rivers.

“The result is ideal conditions for liquefaction in the event of an earthquake,” the report says. “It appears that liquefaction has been a contributor to the losses in the recent earthquake.”

Meanwhile the NZ Earthquake Commission (EQC) says about 2000 properties have been assessed so far and some minor claims had already been settled. But in all there have been 62,015 claims lodged, and it will take months to settle them all.

The EQC says claims are being working through on a priority basis. Early surveys have found 2737 homes are uninhabitable and 3053 are not weatherproof.

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