Earthquake Commission

"EQC" redirects here. For the quizzing tournament, see European Quizzing Championships.
Earthquake Commission
Kōmihana Rūwhenua
Agency overview
Formed 1945 (1945)
Headquarters Level 20, Majestic Centre, 100 Willis Street, Wellington
41°17′18.13″S 174°46′28.09″E / 41.2883694°S 174.7744694°E / -41.2883694; 174.7744694
Employees 885 (2014-2015 financial year)[1]
Minister responsible
Agency executives

The Earthquake Commission (EQC) provides primary natural disaster insurance to the owners of residential properties in New Zealand. The Government-owned Crown entity at one point managed assets of $5.93 billion NZD, but its funds are now being drained by payouts for the 2010 and 2011 Christchurch earthquakes.[3] In addition to its insurance role, EQC also undertakes research and provides training and information on disaster recovery.[4][5]


EQC was established in 1945 as the Earthquake and War Damage Commission, as part of the New Zealand Government, and was originally intended to provide coverage for earthquakes as well as war damage.

Coverage was eventually extended from solely earthquake and war damage to include other natural disasters such as natural landslips, volcanic eruptions, hydrothermal activity, and tsunamis with coverage for war damage later being removed. For residential land, storm and flood damage is covered. Cover extends over fire damage caused by any of these natural disasters.

The current chief executive,[6] Ian Simpson, commenced with EQC in February 2010. He replaced David Middleton who had headed the organisation for 17 years and went into retirement.[7]

Who pays

The cover is provided at the time the premium is paid to a commercial insurer. A disaster insurance premium is charged to the policyholder, up to a maximum of $207 NZD, which provides the holder with EQC's EQCover. This premium is placed into the Natural Disaster Fund.[8]

EQCover entitles the holder to up to $100,000 NZD plus tax (GST) for each dwelling, with any further amount above that being paid by the policyholder's insurance company. For personal effects, EQC pays out the first $20,000 NZD plus tax. The EQC covers only domestic assets and does not provide cover for businesses.

The EQC levies policyholders to cover a major part of the earthquake risk. The EQC reduces its own risk by taking out cover with a number of large reinsurance companies, for example Munich Re. In 2006, the EQC took out reinsurance of $2.5 billion NZD with multiple reinsurance companies, numbering around 30.

There is a $1.5 billion NZD excess for each earthquake event. If the required EQC payout exceeds the total of the excess and reinsurance ($4 billion NZD) the remainder of the payout is met by the EQC up to the limit of the Natural Disaster Fund.[9] If the payout exceeds those assets, a Crown Guarantee requires that the Government pay the remainder.[10]


The EQC paid out for claims made as a result of the 2007 Gisborne earthquake.[11]

For the 2010 Canterbury earthquake, total EQC insurance and individual costs were expected to reach as high as NZ$4 billion according to the New Zealand Treasury. Claims from the 2010 shock were later confirmed at being between $2.75 and $3.5 billion NZD.

A second quake hit Christchurch, the February 2011 Christchurch earthquake. Prior to the 2010 quake, the EQC had a fund of NZ$5.9 billion, with NZ$4.4 billion left prior to the 2011 quake, after taking off the NZ$1.5 billion cost. The EQC does not cover commercial buildings, whose owners have to arrange cover with private insurers.[9]

As of April 2012 the EQC has paid out NZ$3 billion in claims for both earthquakes, and expects to pay a further $9 billion, which will completely deplete their funds and may require a further NZ$1 billion from the government.[12]

In March 2013, EQC came under fire after an employee accidentally sent a file containing details on more than 80,000 claims relating to the 2011 Christchurch earthquake to a contractor.[13] The file was posted online in April, after EQC declined a "televised debate" on its contents.[14]

Claims affecting reinsurance costs

After the 2010 Canterbury quake, it was expected that New Zealand insurers would face rate increases of more than 10% for the renewal of their insurance during 2011. Estimates from the world's largest reinsurer Munich Re put the claim bill faced by the reinsurers from the 2010 Canterbury earthquake at US$600 million, nearly US$200 million higher than initial estimates. This does not include the EQC exposure of NZ$1.5 billion.

Munich Re board member Dr Ludger Arnoldussen, who was in New Zealand to speak with insurers, praised the efforts of those companies which handled the claims and the stringent building standards that were in place in New Zealand. Arnoldussen said the expected hike in rates was also likely to translate to higher premiums for policy holders, the extent of which would depend on how much risk the individual companies were prepared to carry. Meanwhile, figures show the number of catastrophic events in New Zealand quadrupled in the 30 years to 2010, and that 90% of all insured claims during that period were the result of geophysical events. However rates would remain well below those in California, with policy holders there on average paying about 15 times more than in New Zealand, he said.[15]

See also


  1. "Earthquake Commission Annual Report 2014-2015" (PDF). Earthquake Commission. Retrieved 24 January 2016.
  2. 1 2 "Our people". Earthquake Commission. Retrieved 24 January 2016.
  3. "Earthquake Commission Annual Report 2009-2010". 2010. Retrieved 23 February 2011.
  4. "About GeoNet". GeoNet. 28 August 2013. Retrieved 28 December 2013.
  5. "2006 Fulbright Awards Presented". Scoop. 15 June 2006. Retrieved 28 December 2013.
  6. "Executive Leadership Team". EQC. Retrieved 4 March 2015.
  7. "New chief executive for EQC". EQC. 22 December 2009. Retrieved 4 March 2015.
  8. John Hartevelt (2 Feb 2012). "EQC to cut contents cover, hikes levy". Retrieved 13 Apr 2012.
  9. 1 2 Bennet, Adam (23 February 2011). "Christchurch quake: EQC has enough money and 'reinsurance' to cover cost - English". The New Zealand Herald. Retrieved 23 February 2011.
  10. "Briefing for the Minister in Charge of the Earthquake Commission". 4 November 2008. pp. 11–12. Archived from the original (PDF) on 4 November 2008. Retrieved 23 February 2011.
  11. "EQC starts to assess Gisborne quake claims". Retrieved 29 September 2011.
  12. Heather, Ben (2 April 2012). "EQC Payouts Hit $3 Billion". The Press. Retrieved 13 April 2012.
  13. "EQC email recipient denies leaking details". 3 News NZ. 26 March 2013.
  14. "Blogger releases leaked EQC data". 3 News NZ. 12 April 2013.
  15. Nordqvist, Susie (22 February 2011). "Reinsurance rates to rise as earthquake bill soars". The New Zealand Herald. Retrieved 29 September 2011.
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