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Insurance Council Review
The Canterbury Earthquakes of 2010/2011 are the most devastating
and profoundly damaging natural events in New Zealand’s history.
They will reverberate through our communities for decades.

Council Structure
Board
Insurance Manager
John Lucas
Legal Advisor
Simon Wilson
Committee Structure
Board and Membership
Executive
Chief Executive
Chris Ryan
Communications Manager
Brett Solvander
Administration & Support
Madeleine Mitchell & Sharon Baldwin
Finance & Regulation Manager
Terry Jordan
Accident Commercial Employment Finance Liability Marine Motor Personal Regulatory Travel
Earthquake Recovery
Commercial
Insurance Council of New Zealand Board 2011
Back row, left to right: Terry Jordan ICNZ, Martin Kreft Munich Re, Cris Knell Chartis, Martin Stokes MAS,
Gary Dransfield Vero, John Balmforth AMI, John Lucas ICNZ.
Front row, left to right: Christopher Crowder Gen Re, Chris Black FMG, Jacki Johnson IAG,
John Lyon President Lumley, Chris Ryan Chief Executive ICNZ.
Vision
Working
Groups
Earthquake Recovery
Residential
The Insurance Council of New Zealand provides members with the
means to deal with issues that are more effectively and efficiently
handled on a collective basis. It works to increase their efficiency, image
and financial strength as they serve their customers and community.

President’s Report
New Zealand Treasury
estimates the total cost
of the earthquakes at
around $30 billion
The past 18 months have been the most challenging
period in the history of the NZ insurance industry. We
have faced incredible operational challenges in the
most stressful of conditions and we have had to deal
with unprecedented financial losses, all the while in
an environment full of volatility and rapid change.
Meanwhile, we have been subject to intense media
scrutiny and have had to manage a raft of new and
existing stakeholders.
But the challenges have highlighted, like never
before, the essential value which insurance brings to
individuals, businesses, communities and the nation.
1
The year began with the continued response to the
September 4th earthquake, and just as we thought
we were getting on top of the recovery, we had the
devastating earthquake on February 22nd.
The February earthquake was the most destructive,
fatal and extensive insured event in the history of New
Zealand. The event ranks seventh in Aon Benfield’s list
of Top 10 insured loss events between 1980 and 2011.
Even more dramatically, the Christchurch earthquakes
of February and June rank in the top ten insured loss
events in the world for 2011. For a country as small as
New Zealand to suffer three earthquakes on this sort of
scale is unprecedented and has tested everyone within
the industry to the utmost.
As a result of the February 22nd earthquake, 185 people
lost their lives and many more were injured. Extensive
damage to land and buildings means thousands of
people have to replace their homes. New Zealand
Treasury estimates the total cost of the earthquakes at
around $30 billion, which is about 15% of GDP. To put
this estimate in context, the March 2011 earthquake
off the north-east coast of Japan, although larger in
physical terms, is estimated to have caused damage
equivalent to around 3 – 5% of Japan’s GDP.

“Over the past 18 months the relevance
of insurance has been proven, time and
time again. Not just with individuals,
but also in terms of facilitating social
and economic recovery. We should
never underestimate the part we play in
helping New Zealand to move forward”
Rebuilding and recovery therefore represents a huge
challenge for the New Zealand insurance industry, for
Canterbury communities, and for the whole country.
The facts are stark. 185 people died, 100,000 homes
damaged and 7,000 homes “Red Zoned“.
In the CBD, 3,000 of 5,000 businesses displaced, 1,400
buildings demolished, one hundred and twenty
four kilometres of water mains and three hundred
kilometres of sewer pipes damaged.
2
The community lost 635 rest home beds, 19 community
pharmacies and 5 general practices. More than 50% of
the residential roading network required repair and 12
schools, or parts of schools, had to be relocated.
New Zealand as a nation has been shocked, but the
insurance sector has not only responded remarkably
well to this historic event, it continues to respond to
its customers’ requirements despite the fact that we
have now experienced over 10,000 aftershocks since
the initial earthquake in September 2010. We are in the
third calendar year of aftershocks.
As President of the Insurance Council, I would like to
pay a tribute to all those in the insurance sector who
have responded to an event almost unimaginable in
insurance terms for a country the size of New Zealand.
Insurance losses currently sit in the order of $20 billion.
They are likely to continue rising.

“Cantabrians and New Zealanders have
been courageous, resilient, patient and
strong. We understand and share many
of their current frustrations, and as an
industry are committed to doing all we
can to help make progress.”
The impact of the earthquakes is that there has been
a fundamental and permanent shift in the insurance
market. The way in which earthquake risks are insured
has changed forever. An example of this is the approach
to older buildings, particularly those with unreinforced
masonry, which are now more difficult to insure for
replacement cover throughout New Zealand. Many risks
will be unable to attract full insurance cover, and this
development will require collective dialogue between
banks, government, insurers and business groups, to
ensure that economic growth continues in earthquake
prone regions.
A major challenge going forward is to find a good balance
between building standards and cost effectiveness.
Excessive standards will lead to restricted development,
whereas inadequate standards will simply perpetuate
the challenges we have faced in Canterbury where
many buildings and houses have been shown to have
inadequate foundations or design for the conditions.
The cost of insurance has risen dramatically and is likely
to continue increasing as the costs of the earthquake
claims rise. Residential properties have not been impacted
as severely as Commercial but, in general, insurers
are charging significantly more, and the Earthquake
Commission levy tripled from 1 February 2012.
Most insurers appear to be moving away from
percentage of loss deductibles to percentage of insured
value deductibles for earthquake, and the levels of
deductibles on many commercial properties have risen.
The impact on the cost and availability of reinsurance
is major. Catastrophe reinsurers around the world have
experienced an abnormally costly 2011 with significant
floods in Brisbane, the Canterbury earthquakes, Japan’s
tsunami and earthquake, and the Thai floods. The
catastrophe reinsurance modellers are likely to begin
to review their models for New Zealand risk in the
next year or two. This could see a further round of
earthquake insurance cost increases.
3
There will be other changes which will impact the
market as we learn the lessons from Canterbury. These
include issues of under-insurance, open-ended covers,
outdated valuations, insufficient Business Interruption
indemnity periods and insufficient business continuity
planning. We, as an industry, will be looking to our
broker colleagues to assist us in the Insurance Council
highlighting the increased need for scrutiny in these areas.
Despite the challenges of the earthquake, the Insurance
Council and the insurance industry have been required
to carry out their normal daily work. In New Zealand
the Insurance Council has again been leading the
debate on insurance and has continued creating a better
understanding of the economic and social value of our
industry to a successful New Zealand.
The Council has maintained a strong and positive
relationship with the government throughout the
catastrophe recovery period, and also has seen
its relationship with the Opposition, particularly
local Canterbury MPs, built to a very positive
level. Where there are clear differences of opinion
between the government and the Council, we have
sought to engage constructively in expressing
our concerns. However, looking towards the
remainder of 2012 and beyond, we will continue
to build and maintain a strong, constructive and
open relationship with the government on issues
of wider concern to our members, and also in the
continued recovery of the Canterbury region.

The year saw some devastating impacts on members
of the Insurance Council as a consequence of the huge
claims for earthquake. AMI Insurance was supported
by the government and is now likely to be sold to IAG.
Other members of the Insurance Council withdrew from
the market, and others withdrew cover for earthquake.
However, the strength of the insurance industry has been
such that remaining insurers have continued to provide
full cover for the vast majority of New Zealanders
despite the huge impact of the Canterbury quakes. This
again reinforces the value of our international reinsurers
and the international nature of the market.
The Council’s Strategic and Business Plans identify the
priorities and actions in our three core businesses of
Representation, Knowledge Management and Industry
Regulation. I am pleased to report the Insurance Council
Executive has continued to deliver on the objectives of
the Strategic Plan in addition to the work on responding
to the earthquakes.
Considerable effort has been directed to liaison with
related organisations. Constructive and regular
dialogue has continued with the New Zealand Fire
Service, particularly on budgetary and financial
management issues. Regrettably we have not seen any
advances in resolving our concern with the funding of
the Fire Service. Discussions on this issue have been
held with the Minister and there is hope action will be
taken. This will continue to be a strong focus for the
Council in coming years.
4
A very constructive and beneficial relationship has been
maintained with New Zealand Police. The Council has
supported a number of Police initiatives, particularly
the commitment by the Police of additional resources to
the area of burglary and car theft. These activities have
shown positive results.
“Twenty billion dollars of insurance
money is now being paid to the people
of Canterbury to rebuild their lives and
businesses.”
Liaison with the Insurance Brokers has been maintained
and enhanced. Our relationship with brokers has
been particularly important this year. On behalf of the
Insurance Council I would like to pay tribute to the
enormous additional efforts insurance brokers have
gone to in responding to the needs of their customers,
not only in the wake of the earthquake claims but also
as the market has responded to the post-earthquake
underwriting and reinsurance environment. We are keen
to continue building a close relationship with the brokers
and increase dialogue between our two industry bodies.
The Council has been extensively tested but coped
admirably with the deluge of regulation through
the Insurance Prudential Supervision Bill and the
appointment of the Reserve Bank as key regulator for
the industry.

One of the most impressive aspects of the Council is
the considerable goodwill and commitment to the
development of our industry that exists between our
members. While operating day-to-day on a fiercely
competitive basis, member companies readily commit
staff and resource to the furtherance of the collective
interest. Once again this has been evidenced through
the work and success of our committee structure. All
committees have worked to individual Business Plans
and again I thank all of those involved for their immense
contribution. We should strive to ensure that the spirit of
co-operation continues, particularly in these difficult and
testing times.
On behalf of all members, I would like to express our
thanks and appreciation to our Insurance Council
staff for the very professional, enthusiastic and
committed way they have gone about ensuring the
role and objectives of the Council are realised. With
very limited resources, the team, under Chris Ryan’s
leadership, have done a commendable job of furthering
the industry’s interests, in the most challenging of
circumstances. I have been hugely impressed by the
dedication and passion shown by the team, to whom
the Board and I owe a huge debt of gratitude.
I would like to thank the industry members who have
contributed to our work through participation on the
Board, committees and working groups. Without these
committed supporters we would not have the Council
achievements that we do. I am especially indebted to
my fellow directors for their support in the governance
activities of the Council, and for providing exemplary
industry leadership at a critical time.
5
But the most important accolades must go to the staff of
all insurers involved in the earthquake response, for the
enormous contribution they have made to rebuild the
communities of Canterbury. I have seen first-hand the
stress and trauma that impacted many of our front line
teams, and we owe all of these great ambassadors of the
industry our greatest thanks.
Looking forward, the blurring of traditional boundaries
between insurers and financial markets will continue to
present challenges to our Council. Our activities must
remain relevant to the varied and broad interests of
current and potential members, while at the same time
providing a value proposition that is seen as a suitable
return on members’ investment in the Council.
The Canterbury response will continue for years
to come. We need to maintain a strong and unified
Insurance Council to ensure we undertake this work
effectively for the benefit of all our stakeholders. This,
combined with the impeccable reputation the Insurance
Council has maintained, and our focussed strategy and
strong financial position should ensure a positive and
progressive future for all insured New Zealanders.
John Lyon
President
Insurance Council of New Zealand

Council Activities 2011 /12
The following list of activities is provided to identify the
specific work outcomes of the Council, Committees and
Working Groups.
Some of the activities were extensive in nature, others
relatively minor. All, however, are part of the Insurance
Council’s drive to deliver the Strategic and Business
Objectives set down by the members and Board.
While a significant proportion of the Council’s activities
during the 2011/2012 period have been earthquake related,
the Council has also continued its normal core functions of
Regulation, Representation and Knowledge Management of
members’ interests.
Submissions to Government on:
Prudential Supervision Legislation
• Submission on Reserve Bank Governance Guidelines
(Mar 2011)
• Submission on Solvency Standard for Non-Life Insurers
(Jul 2011)
• Submission on classification of consumer credit insurance
policies as “life policies” (Feb 2012)
Earthquake Matters
• Submission on Canterbury Earthquake Recovery Bill
(Apr 2011)
• Submission to Christchurch City Council on its Draft
Central City Plan (Sep 2011)
• Submission on Variation to Retirement Villages Code of
Practice 2008 (Nov 2011)
The Insurance Council pays tribute
to all insurance people involved in
the recovery of Canterbury. Insurers,
Brokers, Adjustors, Call Centre
Operators and Customer Service
people have all gone beyond their
normal responsibilities to help our
customers in need.
6
Other Submissions
• Submission on Government announcement on ACC
reform in December 2010 (Feb 2011)
• Submission on Government’s proposal for Increasing
Choice in Workplace Accident Compensation (July 2011)
• Submission on Structural Vehicle Repairer Licensing Regime
(Mar 2011)
• Submission to Auckland City Council on its Draft
Earthquake-Prone, Dangerous and Insanitary Buildings
Policy (Sep 2011)
• Submission on MED proposal for levy to fund the FMA
(Dec 2011)
• Submission on MED’s Audit Firm Incorporation
Consultation Paper (Feb 2012)
Other Insurance Council activities and
their outcomes:
Earthquake Related Matters
• High Court declaratory judgment regarding extent of EQC
Cover for multiple earthquake events
• Working with EQC on apportionment system for claims
over multiple events following the declaratory judgment
• Creating EQC Protocols (1, 2, 3, 4 and 5) and overarching
MOU between EQC and Insurers
• Creating Dispute Resolution Service with DBH/EQC
pursuant to Protocol 1
• Resolving repair methodology differences between private
insurers and EQC
• Working with the Commission for Financial Literacy and
Retirement Income on the “Red Zone Financial Guide”
Other Committee/Working Group Matters
• Communications - Establishing the ICNZ Communications
Working Group
• ICR – Updating Participation Agreement, Users and
Participants’ Codes of Practice and Responsibilities of ICR
• Personal Lines – Preparing “Excess” and “Glossary of
Insurance Terms” documents for Insurance Council
website
• Presentations at the NZILA Conference, various ANZIIF
Conferences and Lumley Edge Symposium

Chief Executive’s Report
The responsibilities
placed on the Insurance
Council have been
extensive resulting in
significant changes to
our activities.
The start of 2012 sees the third calendar year that we as
an Insurance Council and industry have experienced
the devastation of earthquakes in the Canterbury
region. The quake in September 2010 was the first of
over 10,000 aftershocks and major quakes during 2011
and continuing.
The responsibilities placed on the Insurance Council
have been extensive resulting in significant changes to
our activities. In particular we have had to build strong
and new relationships with the Earthquake Commission
[EQC], the Canterbury Earthquake Recovery Authority
[CERA] and the Canterbury Earthquake Recovery
Minister and associated agencies.
We have worked very hard at representing the industry
during this difficult time to ensure that the best outcome
is found for our insured New Zealanders and the
members of the Insurance Council.
In addition, there have been significant responsibilities
in educating Cantabrians and New Zealanders generally
on the disciplines imposed by the marketplace on
insurers responding to the earthquake and its aftermath.
Nobody thought it would be two years
before we could begin a serious rebuild
but the earthquakes just kept on coming
and destroying the ground and buildings
even further. Even the most optimistic
person couldn’t rebuild amidst over
10,000 aftershocks.
Reinsurers have been very clear that they are picking
up the bulk of the bill which may be as high as $20
billion in Canterbury.
In addition to this work we have been trying very hard
to ensure that the average Cantabrian is aware of the
7
difficulties being imposed by continuing seismic activity,
liquefaction of land, unknown geotech status of land,
resource consent issues and the general stresses and
strains placed on everyone associated with recovery
from the largest earthquake in the history of our nation.
The Insurance Council hired a Communications
Manager to cope with the wider media demands for
updates and information during the year. We also hired
a legally qualified staff member to cope with the number
of technical, legal and insurance reports required to
ensure that our members and our partners through
central government, local government and the industry
are fully informed on what the industry is doing.
In addition to the work responding to the Canterbury
earthquakes and encouraging the rebuild of the
Canterbury region, we were required to carry out our
core activities. In this area we were very conscious of
ensuring we were at the forefront of submissions to
government on the new regulatory environment which is
now taking place under the guidance of the Reserve Bank
as the regulator. Extensive work was put into ensuring
our members were prepared to be fully compliant with
the requirements of this new regulatory regime.
We continued the education of our members through
finance seminars and the dispersal of all information
pertinent to their operations during the year.

An additional working group was created specifically
looking at communications to all parties relating to
the Canterbury earthquake and this has seen a new
set of skills applied to the insurance industry and
the Insurance Council which, hopefully, will benefit
everyone in the longer term.
The Insurance Council has worked very closely with the
broking community to explain some of the issues around
the insurance industry’s response to the Canterbury
earthquake and ensured that the relationship between
brokers and underwriters remains strong.
The Insurance Council has also worked with all other
insurance disciplines including loss adjusting, the legal
fraternity and actuarial professions to ensure that the
response of the insurance industry to the needs of the
people of Canterbury and to insured New Zealanders is
what they expect from the industry.
Numerous achievements of the Insurance Council are
included in this document and the President, John Lyon,
has also detailed many of the strategic objectives which
we have delivered this year.
On behalf of the Insurance Council, I thank the entire
industry for the outstanding professionalism which they
have shown in responding to this unprecedented event.
I also thank those insured New Zealanders who have
suffered at the hands of Mother Nature and been patient
in awaiting a comprehensive response from the industry
during a time of great difficulty and uncertainty from
ongoing aftershocks.
To the Board and staff of the Insurance Council and all
other parties that have assisted us deliver, on behalf of
the industry and our customers, my very warm thanks
are offered.
8
The politicians and leaders of our
communities have shown great maturity
in not scoring political points with
each other and working with common
goals in the recovery process. They
can be proud of their response to this
demanding event.
In addition, I think it is important to recognise those
who assisted during the 2011/2012 period and the
beginning of the recovery of Canterbury, including civil
servants, local authority staff, recovery staff, Police and
Civil Defence personnel.
Despite the pressures the Insurance Council remains
in good heart with strong financial fundamentals. We
are very proud to represent the New Zealand insurance
industry and our customers and will continue to provide
a better understanding of the benefits of a sustainable
and successful insurance industry to a wide range of
New Zealanders.
Chris Ryan
Chief Executive
Insurance Council of New Zealand

9
We Remember
We remember those who lost their
lives as a result of the devastating
earthquake of February 22 2011.
And we reflect on the bravery and
resilience of those Cantabrians
who lost their loved ones, homes,
communities, livelihoods, directions
and dreams.
On behalf of the New Zealand
insurance industry, the Insurance
Council of New Zealand takes this
opportunity to pay tribute to you,
and to pledge our determination to
support the redevelopment of your
vibrant region.

Christchurch
Recounting the Cost
On September 4th 2010 New Zealand suffered its largest
earthquake event (in terms of insured loss) in the history
of the nation. About six months later on February 22nd
2011 New Zealand suffered its biggest earthquake
superseding that of September 4th, which caused current
estimates of $NZ 20 billion worth of damage and killed
185 people.
In the months following the initial earthquake on
September 4th until the writing of this review in 2012,
the Canterbury region was rocked by over 10,000
aftershocks. Huge and devastating quakes were felt, not
only in September and February, but also in June 2011
and December 2011, just three days before Christmas.
The billions of reinsurance being paid
into Canterbury comes from insured
people and insurance companies around
the world. This is new money into our
economy and will be needed by Kiwis to
get back on their feet.
The scale of devastation wreaked by the series of
earthquakes is almost impossible to totally grasp. The
most basic of statistics gives some idea of what insurers
and all recovery agencies were required to deal with:
• 185 people died
• more than 100,000 homes (or approximately half of
the housing stock of greater Christchurch) damaged
• 7,000 homes totally destroyed and Red Zoned, with
the government offering to purchase these properties
• more than 3,000 of the 5,000 businesses in the CBD
displaced
• more than 1,400 demolitions of buildings in the CBD
• 124 kilometres of water mains damaged
• 300 kilometres of sewer pipes damaged
• over 7,000 of the 12,000 Canterbury District Health
Board rooms damaged
• 106 hospital beds at the Christchurch Hospital closed
• 635 rest home beds lost
• 19 community pharmacies lost
• 5 general practices lost or damaged
• more than 50% of the residential roading network
requiring replacement or repair
11
• 12 schools, or parts of schools, relocated
• over 1,600 projects listed in the draft central city
plan requiring some form of capital for repair or
rebuilding.
Every part of the Canterbury community was affected.
Housing, education, health, sports, culture and
infrastructure all require major efforts to return to the
levels of service and activity that existed before the
earthquake. Among businesses, tourism, international
Top ten insurance loss events in 2011
Estimated losses in $USD
Earthquake Japan 35.00 billion
Earthquake New Zealand, 22 February 2011 13.50 billion
Flooding Thailand 10.78 billion
Severe Weather U.S. Southeast, Plains, Mid West 7.30 billion
Severe Weather U.S. Plains, Mid West, Southeast 6.75 billion
Severe Weather Hurricane Irene 5.00 billion
Flooding Australia 2.42 billion
Severe Weather U.S. Southeast, Plains, Mid West 2.00 billion
Earthquake New Zealand, 22 December 2011 1.80 billion
Severe Weather U.S. Plains, Mid West, Southeast 1.70 billion
Canterbury’s first earthquake of 4 September 2010 was a
globally significant loss event in its own right.
Earthquake New Zealand, 04 September 2010 4.00 billion

education, and inner city retail were particularly hard
hit. Most of the area’s hotels and backpacker facilities
were located in the cordoned area of the CBD. Almost
all the high-rise buildings in the CBD suffered total
or serious damage including the 28-storey Grand
Chancellor Hotel. Canterbury University suffered a drop
of 1,500 equivalent full-time student numbers in 2011,
projecting a loss of 20,000 equivalent full-time students
over the next five years.
Damage to residential areas was widespread with
concentrations of extreme damage in the eastern suburbs
of Christchurch. Particularly hard hit areas also included
Kaiapoi and Lyttelton and the severity of the damage
immediately saw a displacement of business and retail
activity to other areas with Oxford, Lincoln, Rolleston
and Rangiora all showing increases in retail trade.
The challenge for the insurance sector was even more
profound than simply repairing or replacing damaged
or destroyed buildings and infrastructure from the
ground up. The earthquakes revealed significant risk
from seismic activity arising from the geology of the
greater Christchurch area. This meant assessments
were required of each area to determine if remediation
work on the land was required before rebuilding could
begin. Land issues added a layer of additional complex
retirement costs to recovery efforts.
In some areas known as Red Zones and currently
containing 7,000 residential properties, the land is
so severely damaged that rebuilding is unlikely to
be practical over the short to medium term. In some
residential areas, such as the small north-eastern
12
community of Brooklands, the whole suburb has been
assessed as unsuitable for repair or rebuilding in the
short to medium term.
As a result of these issues some parts of Christchurch
will never return to the position they were in before
the earthquakes. Some areas will no longer be suitable
for building. In others, such as the CBD where more
than 1,400 unsafe buildings will have to be demolished,
the rebuild areas will look quite different to the pre-
earthquake city.
The value of insurance
has never been more
evident than in the
aftermath of the quakes,
yes there are problems
but billions are being paid
out and will continue to
go into the pockets of
Cantabrians who could
never have recovered
without insurance.
Throughout this the insurance sector responded on a
continuous basis, not only to the enormous number
of claims from Canterbury residents, but also to those
claims from insured New Zealanders for a wide range
of losses. The resulting impact meant the insurance
sector was unable to provide new cover during the time
immediately after each major aftershock or new quake.
This created problems for some people buying and
selling homes, however the insurance industry was able
to ensure existing cover stayed in place.
The Earthquake Commission immediately came into
play and it was clear from early on the sheer size of the
event left the Earthquake Commission unable to cope
with the level of response for such an unprecedented
event. By November 2011 the EQC had received 680,000
building, land or contents claims. The biggest previous
event was the Inangahua earthquake in 1968 with 10,500
claims. Internationally the 4 September and 22 February
earthquakes were each among the five most damaging
earthquakes in the world by insured losses.

The government reacted immediately to the earthquakes.
Treasury now estimates the total cost of the earthquakes
at around $30 billion, which is about 15% of GDP.
The first significant issue for the insurance industry was
duplication of claims from those claiming for the first
$100,000 of EQC cover and then being required to claim
the remainder of their insured loss with their insurance
company. This created duplication of services, a
contributing factor in delays to some customers’ claims.
Insurance puts people back in the position
they were before the quakes, it is not
there to make people richer than they
were before but in many cases it will.
The Earthquake Recovery Act of the 19 April 2011 saw
the creation of the Canterbury Earthquake Recovery
Authority [CERA]. The role of CERA is to develop a
recovery strategy, an over-arching long-term strategy
for the reconstruction, rebuilding and recovery of
greater Christchurch. The aim is to restore the social,
economic, cultural and environmental wellbeing
of greater Christchurch communities as soon as
practically possible.
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The role of reinsurance in recovery was critical with
the Earthquake Commission and the insurance
sector heavily reinsured for the costs of the quakes.
Reinsurance became a key discipline on the response of
insurers to the contracts they had written, not only with
their reinsurers, but also with their customers.
The problems of liquefaction and particularly lateral
spread were clearly identified almost immediately,
causing difficulty establishing costs of claims, costs of
rebuilds, and requiring the collection of wide statistical
data before decisions could be made.
The creation of Red Zones saw the destruction of entire
suburbs and the central government ownership of
these Red Zone houses after negotiation with owners.
The key issue for insurers was a cordon imposed for

safety reasons on the Christchurch central business
district. This saw large parts of the city out of bounds
to all customers, owners, insurers, and adjusters,
and also affected the ability of the insurance sector to
ascertain the value and status of claims. The cordon
also imposed difficulties on insurers and businesses in
terms of Business Interruption policies including the
generally accepted 12-month indemnity period for many
businesses. While insurers worked hard to overcome
these difficulties, there was a lack of understanding
that this was something outside of the control of the
insurance sector.
Our building codes will change, the way
we live in our cities will change, but we
will still be New Zealanders and our
nation will continue to prosper and grow
thanks to high levels of insurance taken
out by prudent Kiwis.
15
Significant levels of under-insurance were exposed,
particularly in the commercial sector, and a key driver
of this was outdated valuations on the properties being
insured. A very large number of people are choosing
cash settlements on their claims due to the continuing
aftershocks and uncertainty about ground conditions,
and the ability to rebuild within a set period of time.
This prompted a degree of concern by authorities with
capital leaving the Canterbury region and being invested
elsewhere instead of in the rebuild.
Significant work was undertaken with the business
community to establish their concerns and relate the
insurance responsibilities back to them as customers.
However there are now, looking forward, extensive
considerations for the future. The first is to establish the
status of the land and then begin the rebuild which is
expected to require at least 30,000 additional workers.
In terms of future considerations for the Insurance
Council, issues of insurability will now be very high in
the minds of insurers with many unreinforced and early

ick buildings potentially uninsurable for earthquake.
The involvement of banks establishing the security
of their investments in property and other aspects of
insurance has been highlighted and banks are likely
to build much stronger and closer relationships with
insurers in the future. The affordability of insurance
post-earthquake will be a real issue with significant
increases in premiums likely to continue, and a much
greater awareness of risk by insurance companies.
The policy issues for the insurance sector and
government going forward will be establishing a
much more sustainable structure for the Earthquake
Commission, and establishing what it is covering
and what it is not, and in particular reducing any
duplication of services between the Earthquake
Commission and the private insurance industry.
16

Profound changes will come from the
earthquakes; insurance will change,
buildings will change and people
will need to be aware of risk in any
investment they make.
The Insurance Council is likely to raise the affordability
issue with government with growing concern that a
trebling of the earthquake levy, a possible increase in
Fire Service taxes, and a recently increased level of
GST, all of which are attached to the original private
insurance policy cost, will see affordability issues arise
and a potential for a reduction in the levels of insurance.
The levels of taxes and other levies attached to private
insurance premiums will need to be reduced.
The effects of the Canterbury earthquake will be felt
for years to come. It featured 7 in the Top 10 insured
loss events in the last 30 years on an international scale
17
according to a prominent reinsurance broker’s data.
Many buildings that were thought to be up to modern
Code did not survive the earthquake. Already tenants
and owners as reassessing the risk of buildings, and
their ability to be tenanted is being determined by their
ability to withstand significant quakes. There is likely to
be a strong and ongoing dialogue between the private
insurance sector and central and local government in
coming years to establish and rectify all the issues that
have been exposed by the enormity of the earthquakes
of 2010, 2011 and 2012.
In the face of all this upheaval, the insurance industry
was required to carry on with its normal daily business
paying claims for fire and flood damaged homes,
replacing items stolen as a result of crime, and the
myriad of other ‘bread and butter’ operations that our
industry achieves for ordinary New Zealanders on a
daily basis.

Industr y Statistics
All Business 12 months to September
Year-End 2007 2008 2009 2010 2011
Gross Written Premium ($) 3,099,077,385 3,260,456,648 3,416,891,966 3,604,101,963 3,979,548,054
Net Written Premium ($) 2,657,163,693 2,807,667,691 2,911,449,528 3,119,058,942 3,179,010,972
Net Earned Premium ($) 2,608,081,917 2,747,509,546 2,857,200,899 3,073,050,146 2,962,014,374
Claims Incurred ($) 1,736,503,436 1,880,923,174 1,845,390,159 2,096,548,674 3,311,871,292
Loss Ratio (%) 66.58% 68.46% 64.59% 68.22% 111.81%
Business Costs (Staff etc) ($) 825,984,278 897,685,308 941,101,455 996,683,386 1,023,410,108
Combined Ratio (%) 98.25% 101.13% 97.53% 100.66% 146.36%
Commercial Material Damage and Business Interruption 12 months to September
Year-End 2007 2008 2009 2010 2011
Gross Written Premium ($) 424,814,574 441,340,110 464,184,727 469,043,879 502,455,302
Net Written Premium ($) 248,966,425 277,244,142 283,055,759 297,579,539 292,078,059
Net Earned Premium ($) 249,854,108 270,404,011 275,462,767 291,158,018 280,155,525
Claims Incurred ($) 175,041,037 185,283,249 167,431,550 172,180,899 155,895,787
Loss Ratio (%) 70.06% 68.52% 60.78% 59.14% 55.65%
Domestic Buildings and Contents 12 months to September
Year-End 2007 2008 2009 2010 2011
Gross Written Premium ($) 703,171,694 766,231,827 840,054,112 933,495,375 1,052,270,223
Net Written Premium ($) 662,679,754 714,632,555 778,957,391 866,335,821 904,836,784
Net Earned Premium ($) 640,728,100 687,754,814 755,435,740 839,897,275 826,974,807
Claims Incurred ($) 535,037,934 566,260,572 541,263,823 525,356,791 515,234,420
Loss Ratio (%) 83.50% 82.33% 71.65% 62.55% 62,30%
Motor Commercial and Private 12 months to September
Year-End 2007 2008 2009 2010 2011
Gross Written Premium ($) 1,108,091,872 1,159,380,800 1,210,153,486 1,266,098,899 1,339,829,531
Net Written Premium ($) 1,080,683,184 1,128,103,360 1,185,128,372 1,253,440,464 1,319,857,990
Net Earned Premium ($) 1,077,998,789 1,104,655,954 1,157,985,830 1,233,098,039 1,265,751,060
Claims Incurred ($) 770,080,686 813,957,780 811,497,477 791,265,591 824,763,162
Loss Ratio (%) 71.44% 73.68% 70.08% 64.17% 65.16%
18

Marine Hull and Cargo 12 months to September
Year-End 2007 2008 2009 2010 2011
Gross Written Premium ($) 107,516,864 113,768,514 126,435,782 119,594,972 125,403,642
Net Written Premium ($) 79,129,286 94,679,961 108,294,198 97,666,992 95,310,182
Net Earned Premium ($) 77,735,860 90,657,762 104,816,033 99,658,692 93,872,738
Claims Incurred ($) 51,332,230 61,080,313 61,083,237 58,600,332 59,722,860
Loss Ratio (%) 66.03% 67.37% 58.28% 58.80% 63.62%
Liability Professional & Defamation, Directors & Officers and Public Product & Other 12 months to September
Year-End 2007 2008 2009 2010 2011
Gross Written Premium ($) 252,485,737 267,149,616 279,800,946 298,229,655 313,644,264
Net Written Premium ($) 219,954,01 234,968,804 242,850,562 255,992,543 269,481,979
Net Earned Premium ($) 212,870,263 236,853,174 238,435,422 250,185,778 261,188,903
Claims Incurred ($) 70,552,528 91,666,012 114,598,447 163,998,021 127,512,090
Loss Ratio (%) 33.14% 38.70% 48.06% 65.55% 48.82%
Earthquake Domestic, Commercial M.D., Business Interruption and Marine Cargo 12 months to September
Year-End 2007 2008 2009 2010 2011
Gross Written Premium ($) 212,597,837 206,530,977 212,963,164 220,172,442 350,256,361
Net Written Premium ($) 114,429,759 95,928,127 112,741,108 116,710,783 69,248,376
Net Earned Premium ($) 111,343,908 100,074,065 109,982,325 115,211,252 4,796,126
Claims Incurred ($) 2,006,587 16,736,697 6,033,131 242,689,944 1,494,617,694
Loss Ratio (%) 1.80% 16.72% 5.49% 210.65% 31163.02%
Other Personal Accident,Travel, Livestock and Other 12 months to September
Year-End 2007 2008 2009 2010 2011
Gross Written Premium ($) 290,398,807 306,054,804 283,299,749 297,466,741 295,688,731
Net Written Premium ($) 251,321,275 262,110,742 200,422,138 231,332,796 228,197,602
Net Earned Premium ($) 237,550,889 257,109,766 215,082,782 243,841,103 229,275,215
Claims Incurred ($) 132,452,434 145,938,551 143,482,494 142,457,105 134,125,279
Loss Ratio (%) 55.76% 56.76% 66.71% 58.42% 58.50%
19

Gross Written Premiums of Business Classes 12 months to September
Year-End 2007 2008 2009 2010 2011
Commercial ($) 424,814,574 441,340,110 464,184,727 469,043,879 502,455,302
Domestic ($) 703,171,694 766,231,827 840,054,112 933,495,375 1,052,270,223
Motor ($) 1,108,091,872 1,159,380,800 1,210,153,486 1,266,098,899 1,339,829,531
Marine ($) 107,516,864 113,768,514 126,435,782 119,594,972 125,403,642
Liability ($) 252,485,737 267,149,616 279,800,946 298,229,655 313,644,264
Earthquake ($) 212,597,837 206,530,977 212,963,164 220,172,442 350,256,361
Other ($) 290,398,807 306,054,804 283,299,749 297,466,741 295,688,731
Total ($) 3,099,077,385 3,260,456,648 3,416,891,966 3,604,101,963 3,979,548,054
Gross Written Premiums of Business Classes by Percentage 12 months to September
2002 2003 2004
Commercial
Domestic
Motor
Marine
Liability
Earthquake
Other
Gross Written Premium
Claims Incurred
Payments projected for 2012 and 2013
13.7% 13.5% 13.6% 13.0%
22.7% 23.5% 24.6% 25.9%
35.8% 35.6% 35.4% 35.1%
3.5% 3.5% 3.7% 3.3%
8.1% 8.2% 8.2% 8.3%
6.9% 6.3% 6.2% 6.1%
9.4% 9.4% 8.3% 8.3%
2007 2008 2009
Earthquake Claims Incurred 10 years to September 2011 and conservative projections for the current year and 2013
2010
2005 2006 2007 2008 2009 2010 2011 2012 2013
20
12.6%
26.4%
33.7%
3.2%
7.9%
8.8%
7.4%
2011
Projected to rise above NZ$ 5 billion
Projected to rise well above NZ$ 15 billion
NZ$ 15 billion
NZ$ 10 billion
NZ$ 5 billion

The Insurance Council of New Zealand
President
John Lyon
Lumley
Board Members
John Balmforth
AMI
Roger Bell retired
Vero
Chris Black
FMG
Christopher Crowder
General Re
Gary Dransfield
Vero
Jacki Johnson Vice President
IAG
Chris Knell
Chartis
Martin Kreft
Munich Re
Martin Stokes
MAS
As Christchurch rebuilds its
infrastructure, landscape and business,
New Zealanders and the business
community at large take heart that
history will remember not only what was
lost but also what is yet to emerge.
The next two years will be pivotal in
directing and managing the shape of a
renewed City.
Standing Committees 2011
Accident Committee
Karl Armstrong IAG
Malcolm Beaton Berkley Re
Mark Caisley Lumley
Michael Clapp Tower
Nigel Edmiston Vero
Ralph Hart MAS
Jan Holden ACE
Dave Kibblewhite FMG
David Krawitz Allianz
Peter Lam China Taiping
Steve Loomes Zurich
Glen Riddell General Re
Mathew Spears Munich Re
Kieran Sweetman AMI
Trent Thomson Swiss Re
Julian Travaglia Chartis
Suzanne Wolton AA
Commercial Committee
Nathan Barrett FMG
Malcolm Beaton Berkley Re
John Beckett Lumley
Brian Coleman Allianz
Jeff Crawford Chartis
Mark Cross Vero
Deborah Cruickshank Munich Re
Simon Foley Zurich
Nancy George Mitsui Sumitomo
David Morrow ACE
Payal Sharma China Taiping
John Stubbs General Re
Andrew West IAG
Employment Committee
Andrea Brunner FMG
Graham Bunkall Chartis
Denise Deegan Lumley
Tanya Hadfield IAG
Nikki Howell AA
Carolyn Pye Tower
Ross McMillan MAS
Barry Mitchell AMI
Simone Nelson ACE
Alison Shackell Vero
Finance Committee
Michael Brent General Re
Peter Brown Vero
Martin Chisholm AA
Dan Coman IAG
Theo De Koster Tower
Dave Kibblewhite FMG
Dean Phillips Munich Re
Graeme Ross MAS
Runesh Roy ACE
Alistair Smith Lumley
Paul Smith Ansvar
Kieran Sweetman AMI
Ying Zhou China Taiping
Liability Committee
Heather Bailey Vero
Jeremy Batchelor IAG
Craig Kirk Lumley
Mark Downes ACE
Nancy George Mitsui Sumitomo
Karl Kemp Allianz
Peter Lam China Taiping
Stirling McGovern Munich Re
Jeremy Nobbs Ansvar
Andrew Pook Zurich
Trevor Rossi General Re
Jeremy Scott-Mackenzie Chartis
Marine Committee
Keith Auld Munich Re
Christopher Barrett Sunderland Marine
John McKelvie Vero
Daniel McIntyre Zurich
Glenn Nadworny Allianz
Mark Roelink NZI Marine
Andrew Scrivens Lumley
Payal Sharma China Taiping
Fraser Walker Chartis
continues over page

Motor Committee
Paul Liddle IAG
Graeme Lynskey Vero
Matt McEneaney Allianz
Dean Munt AMI
Kevin Paxton Zurich
Laura Poru Tower
Payal Sharma China Taiping
Ian Taylor Lumley
Personal Committee
Peter Birmingham MAS
Ross Collett Lumley
Sue Dillon Allianz
Richard Godman Vero
Shaun Kelly AMI
Paul Lightfoot China Taiping
Chris O’Connor Ansvar
Richelle Pirie Tower
Rebekah Tregonning IAG
Geoff White FMG
Regulatory Committee
Sarah Allerby Allianz
Rob Arcus Vero
Peter Birmingham MAS
David Cao China Taiping
Craig Daly AMI
Eugene Elisara Chartis
Martin Hunter IAG
Martin Kreft Munich Re
Wendy Lau Lumley
Craig Morrison Southern Cross Travel
Lisa Murray FMG
Elizabeth Papandrea ACE
Paul Smith Ansvar
Jacqui Thompson AA
Travel Committee
Toseef Ahmad Tower
Will Ashcroft Allianz
John Beckett Lumley
Michelle Boulger IAG
Bob Davie Comprehensive Travel (Vero)
Karl Dixon Great Lakes (Munich Re)
Michael Joines Chartis
Peter Lam China Taiping
Craig Morrison Southern Cross Travel
Lorraine Smart IAG
Insurance Council Members
AA (joined 2012)
ACE
Allianz
AMI
Ansvar
Berkley Re
Chartis
China Taiping
Cigna (joined 2012)
Civic Assurance
FMG
General Re
IAG
Lloyd’s
Lumley
MAS
Mitsui Sumitomo
Munich Re
Pacific International
Hallmark
Southern Cross Travel
Sunderland Marine
Swiss Re
Tower
Vero
Zurich
Insurance Council of New Zealand
PO Box 474
Wellington 6140
+64 4 472 5230
www.icnz.org.nz