(Re)insurers face large claims as damage bill soars

Christchurch’s latest earthquake could trigger larger losses than September’s Darfield quake, according to new reports.

A 6.3 magnitude quake hit the South Island at midday local time, just 10km south of Christchurch.

Aon Benfield has reported severe damage to the South Island city including building collapses, flooding, burst pipes, fire damage and road collapses.

Lloyd’s Market Association said in a statement it is “impossible” to give clear loss estimates at this early stage but added Lloyd’s underwriters are concerned.

“Lloyd’s underwriters do participate on the reinsurance programmes of many of the large domestic carriers as well as that of the Earthquake Commission, which offers NZ$100,000 coverage to homeowners on a first-loss basis and purchases reinsurance coverage up to NZ$4bn,” the statement said.

“This was impacted by last year’s event under the same programme year but has a reinstatement available,” LMA added.

Lloyd’s member agency Hampden said the latest quake has the potential to be just as costly to the (re)insurance industry as last September's.

“Early pictures show a lot of damage and reports suggest it has been a more devastating event for the city of Christchurch than September's,” Hampden added.

The estimated insured loss total for the September 2010 Christchurch earthquake increased from an original estimated US$2bn to US$4.5bn range to a new range of US$5.5bn US$6bn.