New Zealand reinsurance rates may triple at July 1 renewals: S&P’s

Reinsurance rates may triple at July 1, 2011 renewals for New Zealand-only placements as a result of the Christchurch earthquakes, Standard & Poor’s predicts. For joint Australian/New Zealand programs, the increase will be less, more on the order of 50%, S&P’s notes in a report.Prior to the Christchurch quakes, New Zealand enjoyed favourable pricing, and some insurers have benefited from discounts for loss-free records, which will no longer be available, S&P’s says in a release.”New Zealand rate increases have and will be substantial, especially at lower reinsurance layers and for insurers biased to South Island, Christchurch and Wellington risks,” the ratings agency says. “To recoup some of the reinsurance price increases, major insurers have already put through significant price increases of the order of 20% for property-related cover, with no material loss of customers.”S&P’s said it expects reinsurers will push insurers to raise retention levels, and the firmer prices may attract more reinsurers to the market. “At this time, we understand there has been no significant withdrawal of global reinsurers from New Zealand. Indeed, given the prospects for improved pricing, New Zealand’s attractiveness to global reinsurers may actually increase.”