A few days ago I referred to impending changes in our expectations that someone else will pick up our financial risks of earthquake loss. There are steep increases in the costs of getting others to carry our risks. It may become irrational to continue to insure as we have in the past.
According to these statistics, out of all the OECD countries NZ is the lowest in terms of penetration (gross premiums as a percentage of GDP); the lowest in terms of life insurance as a percentage of GDP; and towards the bottom half of all countries in terms of non-life insurance as a percentage of GDP.
These statistics appear inconsistent with the view that we are "the most insured country in the world" for earthquake risk. They do not separate out earthquake cover from other cover. Earthquake cover has been standard here. Elsewhere it is a specific additional risk in many policies. But the statistics still suggest caution in concluding that we have been over-insured. Perhaps another factor could be extraordinary historical cheapness in our insurance that meant we got the extended coverage for much less than other countries.
A Massey University study conducted for the Financial Services Council and reported in 2011 suggests that we are 'under-insured' for personal risks (life, disability income and trauma/dread disease). So perhaps our customary full insurance of earthquake risk is not a reflection of an overall risk aversion.
Does anyone know? No doubt we will find out in due course, but if we are now staring at less insurance off a low base, we better learn more self reliance and resilience rather quickly……