A devastating earthquake struck New Zealand early this year, causing widespread damage throughout the region of Canterbury. In the wake of the quake, insurance companies fled the nation, paying out policies and refusing to sell insurance in the region until recovery had been achieved. In the months following the disaster, the New Zealand government offered to purchase the properties that had been damaged, all of which were completely uninsurable. Recently, however, insurance agents and underwriters have been visiting Christchurch, the city most affected by the disaster, looking to assess the opportunities that exist therein.
The majority of homes and businesses in the Canterbury region are currently uninsured. Those few with insurance are unable to change carriers due to the lack of alternative insurance companies working in the nation. As insurers begin to show tentative interest in returning to New Zealand, however, that may soon change. The Reserve Bank of New Zealand notes that any company returning to the country will likely bring with it much higher premiums than when it left.
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The earthquake, and its subsequent aftershocks, has caused an estimated $22.3 billion in damages. Much of this was absorbed by the reinsurance industry with many large, foreign reinsurance companies pooling funds to help mitigate the impact of the quake. At the time of the disaster, insurers were quick to pay out policies and leave the country, leaving the government to wrangle with the costs of recovery.