The two major earthquakes that hit New Zealand in September 2010 and in February 2011 generated insurance losses of an estimated US$17 billion. These losses were a combination of payouts through the country’s public residential insurance, the Earthquake Commission (EQC), losses to the commercial sector and losses to residential properties in excess of the EQC, covered by private insurers. The EQC alone faced more than 310,000 claims, with each of the two events drawing the highest number of claims by far in the EQC’s 65-year history. The second largest insurer in the country—AMI, with 85,000 policyholders in Christchurch alone—had to be bailed out by the government with an estimated US$800 million. Insurance claims could not be paid in a timely manner, creating a bottleneck for residents’ relocation to safer areas. Therefore, a programme was initiated by the government, in partnership with the insurance sector, in which 80 percent of residents in high-risk areas were allowed to not only sell their land but also to hand over the insurance claim.

Following the two earthquakes, zoning policies and building regulations were revised, including a decision to abandon selected suburbs and depopulate the severely affected and densely built-up central business district of Christchurch. Moreover, the insurance industry announced several important changes, including incapacity to pay out (AMI) and the termination of insurance policies (Ansvar Insurance). As a result, the EQC premiums trebled from early 2012 onwards to reduce the insurance policy’s cash shortfall and begin to rebuild its reserves. A major concern, however, is that new earthquakes may hit New Zealand in the coming years, repeating the country’s experience between 1929 and 1942, when a series of seven major earthquakes struck.