New Zealand’s Earthquake Commission is taking a new tack on the likely insurance costs if a major quake hits Wellington. Using a statistical model produced by the Institute of Geological and Nuclear Sciences, GM David Middleton wants reinsurers to lower their estimates of the likely payouts.

The institute’s research says a magnitude 7.5 quake hitting the NZ capital – which is built along an earthquake fault line – would cause about $NZ10 billion damage and kill more than 900 people if it struck during the day. If it happened at night, the death toll would be as low as 140.

According to Mr Middleton, that’s a lot lower than the reinsurers’ present estimates. He intends to present the institute’s findings to reinsurers in Europe later this month and ask for a better deal. In the past few years premiums on some buildings in Wellington have reportedly trebled.

He says while a major Wellington quake would be catastrophic for NZ, the city is too small to cause problems for the global reinsurance market. “It’s not big if you are a reinsurer in London or Zurich.”