Quakes Hit New Zealand: Business Balance-Sheet Risks Rise

Two powerful earthquakes struck New Zealand within eight days in late July, one of which was the largest ever recorded in its region. The events served as a stark reminder that earthquake risk is not just an environmental issue but also a business balance-sheet concern.

New Zealand Earth Sciences seismologist Sam Taylor-Offord stated bluntly: 'We live in New Zealand. We will get more earthquakes. Where they will happen is more or less anywhere in the country.'

According to research, awareness of earthquake preparedness among homeowners is high at 74%, but most have not taken action due to financial constraints and complacency. Business owners are also guilty of this complacency, prioritizing easy measures like buying insurance over crucial operational work.

The National Hazard Fund holds approximately $670 million, but this figure pales in comparison to the estimated $32 billion in insurer payouts after the Canterbury earthquakes and an additional $3-8 billion in costs from the 2016 Kaikoura earthquake. Insurance premiums have skyrocketed, with home premiums increasing at three times the rate of the consumer price index since 2011.

The article emphasizes that it's not just about having insurance but also ensuring it covers business interruption, has an acceptable waiting period, and keeps pace with inflation. Businesses are also advised to test their readiness by running through scenarios like staff reaching critical data from remote locations and payroll continuity in case of disruptions.