GeoNet Data Holds Key To Securing Affordable Insurance For New Zealand
EQC’s ongoing investment in natural hazard science including the world-leading GeoNet platform provides confidence to international reinsurance markets to continue providing cover for New Zealand , writes Fraser Gardiner, Chief Financial Officer at the Earthquake Commission.
This year, we celebrate the 20th anniversary of the Earthquake Commission (EQC), Land Information New Zealand and GNS Science creating GeoNet, a world leading state-of-the-art geological hazard monitoring service.
Ever since the Canterbury Earthquake Sequence, hundreds of thousands of New Zealanders look at the GeoNet app on their phone when they feel the Earth moving to check the location and strength of any earthquake.
It is hard to imagine life in the Shaky Isles without earthquake or tsunami alerts from GeoNet and the associated Felt Reports.
Before 2001, scientists from GNS Science, New Zealand universities and other agencies had already created a deep understanding of our natural hazards with the then available monitoring networks, but the development of GeoNet supercharged the research in this area.
Outside of the science community, most New Zealanders may only have become aware of GeoNet after the Canterbury earthquakes, but the work to enable access to this information was created well before this.
New Zealand is extremely fortunate to have a world-leading natural hazard monitoring tool in GeoNet that not only provides invaluable data to scientists, but also enables EQC and private insurers to create sophisticated loss modelling to understand our risks and potential losses in a natural disaster.
International reinsurers rely on loss models to assess whether or not to provide cover for New Zealand and how much they need to charge in premiums.
It has therefore been incredibly important for EQC to provide a specific New Zealand-view of our risks that can be compared to other models developed by a number of US-based companies.
Understanding our natural hazards and their potential impact is vital for New Zealand’s physical and economic security.
In 1998, EQC and its international reinsurance agent Aon began the development of a bespoke risk-modelling tool for New Zealand, called Minerva.
The data from GeoNet and insights from the science funded by EQC and others enables our modelling experts to update our risk models that estimate the potential financial cost of a wide range of earthquake events.
We are currently transitioning to a new loss modelling platform, called RiskScape, that will support the inclusion of the latest research and a wider range of natural hazards.
Even the most sophisticated risk modelling tool relies on getting the best data available, so the input from GeoNet that is then used by GNS Science researchers and other Kiwi scientists is vital in making our loss models more accurate.
Last year, EQC invested around $22 million into natural hazard research, of which an overwhelming majority was allocated to GeoNet.
The GeoNet data provides the backbone of numerous research projects, as well as the Minerva model.
Over the past 20 years, EQC has invested $189 million to allow GeoNet to record and collect data on earthquakes, tsunamis, volcanic activity and landslides that underpins our mission to reduce the impact on people and property when natural disasters occur.
The reliability of the data and our risk models has become an invaluable asset when EQC engages with the international reinsurers to underwrite a substantial portion of our EQCover programme, enabling EQC to provide the residential and land insurance New Zealanders have come to rely on after natural disasters.
Early this month, EQC confirmed a record-high reinsurance cover of nearly $7 billion for the 2021/22 financial year, which is a remarkable result in an international reinsurance market that has become increasingly tougher due to Covid 19 and several major natural disasters.
It also demonstrates the trust the market has in our risk model and our Kiwi scientists.
Reinsurers still use one of the international catastrophe models, but our New Zealand modelling carries significant weight and trust to be able to affect negotiations favourably.
All of this work and risk analysis would not be possible without the huge amount of data and insight provided by GeoNet and the GNS Science experts.
EQC is proud to support GeoNet and wants to congratulate everyone involved on providing New Zealanders with a better understanding of our natural hazards for the past 20 years.