The government and EQC’s role in disaster insurance should be radically reduced, Vero chief executive Gary Dransfield says.
He gave this message to a Trans Tasman Business Circle leaders' meeting in Wellington today.
“Given the government’s commitment to a balanced budget and debt reduction, Vero questions whether it is sensible to operate a fully resourced and funded public insurance agency with the sole mandate of managing claims after a major natural hazard disaster.
“I believe there are a number of different models that should be considered for private insurer and government involvement in earthquake insurance.
“Some could result in a substantially reduced level of Crown involvement in the provision and administration of general insurance, including no involvement in claims management.
“Others could have a changed level of Crown and private insurer funding.
“For example, private insurers could write earthquake insurance up to a set maximum amount and the Crown could act as a virtual reinsurer and meet the costs of claims above a set cap.”
Mr Dransfield emphasised the complications in EQC interacting with private insurers to manage claims.
Vero plans to model to insurers and the Crown the costs of a range of options that are alternatives to the present hybrid approach, he says.
A spokesman for info@InsuranceWatch.org.nz, David Stringer, says he would like Mr Dransfield to be more specific about alternatives.
Private insurers had benefited by about $500 million from last year’s High Court ruling on apportionment – how much private insurers should pay versus the government/EQC.
He says EQC should not be involved in contents insurance but there was a level of protection in having it as the “first insurer” in cases of disaster.
“If EQC was scrapped, or its role vastly reduced, would private insurers offer any disaster protection at all?” Mr Stringer says.
“They might just say it is no longer available."