Earthquake “shock” policies are put up for sale in New Zealand

A new insurance policy designed to grant quick cash payments after a dangerous earthquake reveals just how dangerous the insurance market Lloyd’s of London looks to New Zealand cities.

The founder of Bounce Insurance said the budding insurance company Bounce’s policies were not designed to replace earthquake cover in home insurance.

Instead, they were there to help Kiwis recover quickly by putting money into their accounts for immediate post-earthquake expenses, including buying food, or replacing broken items, if their incomes were disrupted.

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“The New Zealand experience is a reminder of the physical, emotional and financial stress that those dealing with the fallout of a major earthquake face,” said Barton, who saw the impact of the Canterbury earthquakes on homeowners a decade ago while working for the benefit of New Zealand. Medical Insurance Association.

“It has also demonstrated how complex and time-consuming it can be to file, process, approve and pay traditional insurance claims,” ​​he said.

Ian MacGregor / Staff

The 2016 Kaikoura earthquake caused massive damage to many people’s homes.

Since switching to “sum insured” home insurance after the Canterbury earthquake, payments to homeowners for earthquake damage have become much faster, as homeowners found after the 2016 Kaikoura earthquake.

Supplied

Paul Barton, founder of Bounce, an insurance company that sells earthquake insurance.

But Barton said: “A number of costs are incurred in the period between an earthquake and a family or company receiving insurance payments, and this delay can exacerbate this pressure and cause significant financial hardship.”

He likened it to the shock insurance policies that people often take with income protection policies, which are designed to make quick lump payments to help sick, sick and injured people cope while they wait for their income protection policies.

The Bounce Policies were written by Lloyds of London, which now ranks New Zealand as the second most disaster-prone country in the world after Bangladesh.

Insurance premiums are calculated based on the risks that the London insurance company considers from large earthquakes occurring in the areas where people live.

People from the affluent Epsom suburb of Auckland pay $ 9.20 a month to cover $ 10,000, like someone who lives in the suburb of Kaikurai in Dunedin.

The same amount of coverage for someone living at Rawhiti Terrace in Kelburn, Wellington, was $ 20.70.

Anyone on Newall Street in the Christchurch suburb of Vindalton would pay $ 13.80.

Barton said the payments were triggered on policies, if the policyholders’ home address was subject to vibration at a ground speed of at least 20 cm per second due to the earthquake event.

Payments on Bounce’s policies would have been possible for a lot of people who live in Christchurch when the 2011 earthquake struck, as well as people who live in Kaikoura when an earthquake struck there in 2016.

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