International reinsurers paid almost 65% of insurance claims from the Canterbury earthquakes, according to the Reserve Bank of New Zealand (RBNZ).

The proportion of private sector claims – excluding the Earthquake Commission – funded by reinsurers was more than 80%.

“New Zealand is fortunate that the level and take-up of earthquake insurance coverage are currently extremely high by global standards,” Head of Prudential Supervision Toby Fiennes told the Australasian General Insurance Exchange conference in Sydney.

“As a result, a substantial proportion of costs will be funded by insurance, and shared globally by reinsurance.”

The RBNZ’s new regulatory regime for insurers now has more than 100 insurers licensed under the 2010 Insurance (Prudential Supervision) Act.

Seven companies quit the market when the Act came into force. Mr Fiennes expects further consolidation in the insurance sector because of higher minimum solvency standards.

“This is positive for the sector and for policyholders, because reducing areas of high risk assists in the correction of any mispricing of risk and will improve the soundness of the New Zealand insurance sector,” he said.

Non-life insurance accounts for 57% of gross annual premium in the New Zealand market, with life cover at 25%, health insurance 12% and reinsurance 7%.

Locally domiciled companies earn 81% of premium and Australian insurers take 13%.

The insurance regulation is consistent with the RBNZ’s approach to other sectors, Mr Fiennes says.

“The prudential requirements of the Act significantly reduce the likelihood of failure and provide the bank with appropriate tools to manage financial distress of an insurer.

“However, we do not run a zero-failure regime. Nor is there any reserve bank or government guarantee against failure.”