Early 2012, New Zealand’s government will triple levies paid to New Zealand’s Earthquake Commission to help rebuild a NZ$6 billion (US$4.7 billion) Disaster Fund. New Zealand’s Finance Minister Bill English has announced this earlier this week, made the announcement after the government said its operating deficit before gains and losses for the year to June 30 was a record NZ$18.4 billion, largely due to earthquake-related expenses.
Insured homeowners currently pay the EQC NZ$0.05 per NZ$100 of insurance cover, up to a maximum of NZ$69 a year, as part of their insurance premiums. Under the proposed changes, homeowners will pay NZ$0.15 per NZ$100, with an annual cap of NZ$207. The EQC currently covers an initial NZ$100,000 of insurance for dwellings and NZ$20,000 for contents. The remainder is covered by private insurance.
The EQC’s net cost from a series of earthquakes beginning Sept. 4, 2010, including one in February that left more than 180 people dead, was NZ$7.6 billion in the year to June 30, with more than 400,000 claims filed, according to the New Zealand Treasury.
Among other things, the increased levy will provide revenue to meet the Earthquake Commission’s operating costs and to cover higher reinsurance costs, and will make it possible to rebuild the Natural Disaster Fund to NZ$6 billion in about 30 years.
The annual levy revenue will increase to about NZ$260 million from NZ$86 million, English said.
