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Member, Beacon International Group, Ltd.
CHRISTCHURCH, New Zealand—Rates for New Zealand property catastrophe reinsurance may more than triple at the July 1 renewals as a result of two earthquakes that struck the country in the past year, Standard & Poor’s Corp. said in an analysis.
While reinsurance capacity is available for New Zealand risks, rates are likely to be “materially higher” with terms and conditions that are more favorable to reinsurers, S&P said in a report released last week.
In addition, reinsurers are likely to push cedents to take larger retentions, according to the report.
No withdrawals from market
Rates could more than triple for New Zealand-only placements, while joint Australian and New Zealand programs likely will see rate increases of about 50%, said Mark Legge, a credit analyst at S&P in Melbourne, Australia, and one of the authors of the report.
There has not been any notable withdrawal of international reinsurers from New Zealand after the earthquakes last September and in February, the report noted. Increased rates may have the effect of making New Zealand more attractive to global reinsurers, S&P said.
The report, “Reinsurance Capacity Available for New Zealand, But at What Cost?,” is available to subscribers at www.standardandpoors.com.