Earthquake Commission (EQC) Chairman Michael Wintringham has suggested that private insurers are trying to shift earthquake costs to the state-owned organisation.

Writing in its annual report, Mr Wintringham says the EQC estimates its total costs of the Canterbury earthquakes will be $NZ12.5 billion ($9.79 billion).

He says insurers are facing the costs of settling commercial as well as residential claims and “by any standard, the sums involved are huge”.

“In this environment, there is an incentive for insurers to reduce their own liabilities by shifting costs to the Crown or to other parties,” he says.

Mr Wintringham says the EQC’s responsibilities are governed by legislation and customers should not be burdened by additional uncertainty or delays because of the interaction between the EQC and insurers.

The EQC covers the first $NZ100,000 ($78,360) of earthquake loss and amounts higher than that are passed onto private insurers.

The interaction between the EQC and insurers has delayed claims settlements and caused considerable public criticism of both.

Mr Wintringham says there is a “public policy conundrum” as to whether it is sensible to maintain the EQC in anticipation of a one-in-300 or one-in-500 year event.

The annual report shows the EQC made a loss of $NZ440 million ($344 million) for the year to June 30, compared with a $NZ7 billion ($5.5 billion) loss in 2011.

The Natural Disaster Fund ended the financial year with a $NZ1.59 billion ($1.25 billion) deficit.

Gross earned premium rose 22% to $NZ107.5 million ($84 million).

The levy on homeowners trebled to NZ15 cents per $100 sum insured on February 1 to rebuild the Natural Disaster Fund. This will increase annual levy revenue from $NZ86 million ($67 million) to $NZ260 million ($203 million).

EQC’s reinsurance cost $NZ70 million ($54.8 million), up $NZ20 million ($15.6 million), and the commission received reinsurance recoveries of $NZ354 million ($277 million), compared with $NZ4 billion ($3.1 billion) the year before.

More than $NZ1.19 billion ($930 million) was paid on all disaster claims, compared with $NZ11.4 billion ($8.9 billion) in the previous year.

CEO Ian Simpson says that during the year staff carried out 192,000 assessments and repaired more than 17,000 homes.

“With 80,000 more properties to repair and others to pay out on, the task we face remains immense,” he says.

The EQC received 5755 claims from natural disasters in other parts of New Zealand during the year.