Reinsurance capacity is ensuring that some Western Pacific Insurance Limited policy holders are finally receiving their first payouts from the 2010 and 2011 Canterbury, New Zealand earthquakes, according to the insurer’s liquidators.
The shareholders of Western Pacific placed the firm into liquidation in April 2011, after the insurer was found to have insufficient reinsurance protection to be able to fully manage the impacts of the Canterbury earthquakes.
Now, roughly six years after the 2011 earthquake, liquidators David Ruscoe and Richard Simpson of accounting and advisory firm, Grant Thornton, has revealed that the first payments are now being made to the insurer’s Canterbury policy holders, which are mostly holders of commercial buildings.
“The liquidators are delighted to be able to begin the pay-out,” said Ruscoe. “We always knew this would be a difficult case to manage and it would take time to resolve. Unfortunately, Western Pacific had insufficient reinsurance in place to be able to fully deal with the extent of the losses,” he continued.
The liquidators revealed that it’s making an initial distribution of 35% of the value of accepted claims for the 2010 earthquake, and 20% for the 2011 event. Stating that different levels of payout are evident for each event owing to the varied levels of reinsurance held by Western Pacific, and because the 2011 earthquake resulted in a higher value of claims.
“Further payments are expected to be made to the Canterbury policy holders over the next few months once additional money is received from reinsurers. We estimate additional payments for the 2010 earthquake claims will range from 20% to 40% of assessed losses and between 15% and 20% for 2011,” continued Ruscoe.
According to the liquidators, a court has said that Canterbury policy holders have priority to receive the reinsurance proceeds of Western Pacific, meaning that other creditors of the insurer are unlikely to receive the payments they are owed.
It’s promising to hear that at least some policy holders will now start receiving payments, something that appears to have been made possible only because of reinsurance protection, something the insurer should have had more of in place at the time of the devastating earthquakes.
