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Insurers’ bill for the New Zealand earthquake climbs to 12 billion USD

Wednesday, March 2nd 2011 - 17:21 UTC
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Rescue workers continue to search among the rubble Rescue workers continue to search among the rubble

One of the world's biggest re-insurers Swiss Re described the New Zealand earthquake as a ''significant event'' for the global insurance industry, as it warned insurance losses from the disaster could top 12 billion US dollars.

The Zurich-based Swiss Re said its own payouts against last month's quake could reach 800 million US dollars.

Reinsurance is purchased by global insurers to protect against losses from catastrophes. While it is often the biggest single expense for general insurers, it is crucial for capping the cost of payouts.

Australian insurance executives have warned re-insurers could be forced to raise rates or retreat from the Australian and New Zealand markets after a succession of natural disasters in the past two years triggered huge payouts.

''The purpose of insurance and reinsurance is to help individuals and communities cope with the devastating impact of such events,'' Swiss Re's chief executive, Stefan Lippe, said.

He noted take-up rates for earthquake insurance are high in New Zealand, due to the government-backed insurance scheme, the Earthquake Commission. Householders can purchase private insurance above cover provided by the commission. Business risks are insured by private insurance companies.

Meantime the death toll in Christchurch continues to climb and on Tuesday reached 169, but the Police expect the final toll to reach about 240 but an exact number may not be known for months.

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