Thursday, February 24, 2011

New Zealand Earthquake - Millions Depend on Aftershock Definition


Should the two major re-insurers in Australia, Swiss Re and Munich Re, make a final decision that Tuesday's earthquake was a separate event from the earthquake last September, then there would be major financial implications for two of Australia's largest primary insurers, IAG and Suncorp.
Reinsurance arrangements mean that IAG's exposure to the Christchurch earthquake is capped at $40 million, while that of Suncorp is capped at $45m.
But these amounts are to be paid to reinsurers in the case of specific events, and if it is two events rather than one, then each company would have to pay double the amount.

So, the Clueless Swiss will have to decide what is an aftershock.  If they decide it's 2 events, they pay less.  Oh, what will they decide?

The NZ team is rooting for one event.

I sure hope nobody drags me into this.  :)


Anonymous said...

'aftershock' is a descriptive term and every time the ground shakes it is an earthquake and therefore an 'event'. Both insurance and reinsurance contracts deal with such issues be they earthquakes or bushfires and there is nothing to "decide". It is clear

Harold Asmis said...

The article implied there was an issue.