House damaged in one of the quakes
Another round of insurance premium hikes is likely as global reinsurers pass on their mounting costs from the Canterbury earthquakes, the Reserve Bank says.
The swarm of earthquakes in and around New Zealand's second-biggest city through the past 18 months has caused more than $30 billion of insurance claims, which already prompted reinsurance firms to push up their premiums as they seek to minimise the cost to their bottom line.
"A significant proportion of the general insurance market has reinsurance renewals under way for a 1 July, 2012, effective date," the Reserve Bank said in its financial stability report on Wednesday.
"A further increase is likely, on top of the very large increases experienced last year."
The bank said there have been "significant premium increases" across the nation, with home insurance premiums up more than 35 per cent in the year."Some insurers have made changes to reduce their exposure to future catastrophic events - by increasing excesses, changing how limits operate, and moving away from uncapped replacement cover," the report said.
Just $7.6 billion had been paid out in claims as at March 31 due to continued seismic activity and delays to the rebuild. Some $3 billion of the claims paid have come from the Earthquake Commission.
The bank said there is still "considerable uncertainty" in the claims estimate, with a low proportion of claims being settled.
The quakes have also prompted some insurers to quit New Zealand, such as Ansvar, while others have been "supported by capital injections from their parents".