Managing Risk – Premiums, Reinsurance and the Natural Disaster Fund

EQC’s risk financing strategy is aimed at ensuring EQC has access to the necessary financial resources to meet the potential liabilities arising from the insurance scheme provided under the Earthquake Commission Act 1993. There are two primary ways through which EQC manages this – the Natural Disaster Fund, and a reinsurance programme. 

At the time of the first Canterbury earthquake in September 2010, the Natural Disaster Fund had grown to just over $6 billion. This provided significant funding to meet the unprecedented costs of the Canterbury earthquake sequence.

The importance of the management of New Zealand’s relationships with reinsurers cannot be over-emphasised in the context of New Zealand’s ability to respond to future disasters. EQC’s annual reinsurance programme is one of the largest in the world. EQC has recently finalised its reinsurance programme for the 2019/20 financial year, with $6.2 billion of reinsurance.

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