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NZ earthquake to cost Swiss Re $800 million

Zurich-based reinsurance giant Swiss Re has announced a provisional estimate for its claims costs from the New Zealand earthquake of $800 million (SFr741 million).

The total insured claims for the insurance sector caused by the February 22 disaster are estimated to be between $6 billion and $12 billion, Swiss Re said.

The magnitude 6.3 earthquake which struck the Christchurch region of the South Island of New Zealand last month caused fatalities and widespread damage, particularly in the business district of Christchurch, New Zealand’s second largest city.

Take up rates for earthquake insurance are high in New Zealand, according to Swiss Re.

Residential properties are insured by the government run Earthquake Commission scheme (EQC) up to 100,000 New Zealand dollars (SFr68,560) per building policy and NZD 20,000 per contents policy.

Householders can purchase private insurance above the NZD 120,000 cover provided by the Earthquake Commission. Commercial and industrial risks are insured by local and global insurance companies.

“The uncertainties in estimating losses from such an event are significant, and this preliminary estimate may change as new information becomes available,” a company statement said.

Swiss Re is the number two market player in the reinsurance business behind Munich Re. The earthquake claims estimate is close to the company’s 2010 profits of $863 million.

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