Quake reinsurance has wider ramifications

A major Chinese insurance company says it will not underwrite any new business in either Canterbury or Wellington and has significantly tightened up the risk criteria for other businesses.

In a letter, released today by Labour’s Earthquake Recovery spokesperson Lianne Dalziel, China Taiping has advised New Zealand brokers it is tightening up the risk criteria imposed by its reinsurers.

“This is no longer just Canterbury’s problem. No new business will be underwritten by China Taiping in Wellington either.

“The new rules apply immediately to new business and will apply to existing policies as they come up for renewal from 1 July – that’s just one month’s notice.”

Lianne Dalziel says that the criteria don’t just affect businesses in Canterbury and Wellington.

“In New Zealand this company will not offer insurance for buildings built before 1950, categorising heritage buildings as ‘unacceptable’. It applies even if the buildings have been strengthened to 100 per cent of code, which suggests a lack of understanding of the New Zealand built environment and the performance of poorly constructed and reinforced buildings.

“As well, the capped exposure of $6million in any one event would leave some businesses so exposed as to make them unviable.”

Lianne Dalziel said that although China Taiping was not as exposed to the New Zealand market as companies like AMI, IAG & Vero, it has a significant share of the New Zealand-Chinese business.

“I would like to know what work the government has done to provide reassurance to the Asian insurers and their reinsurers.  I suspect they may have fallen under the radar with the focus being on the European reinsurers.

“There is a certain irony in the fact that the Minister is today releasing the long awaited Canterbury Earthquake Recovery Strategy that has nothing in it for yet another set of insurance brokers and their clients who now have a month to get new insurance cover if they can,” Lianne Dalziel said.