Earthquake Commission (EQC)
The Earthquake Commission is a government agency which provides natural disaster insurance to residential property owners. It insures against damage caused by earthquake, natural landslip, volcanic eruption, hydrothermal activity, tsunami; in the case of residential land, a storm or flood; or fire caused by any of these.

 

Insurance
Insurance is a financial safeguard against unexpected events, such as a fire, burglary and car accidents. It’s about managing the risk, or the chance, of something unpleasant and unexpected happening, and then getting financial help and support when it does.

 

Insured
The insured is a person or organisation who has paid an insurance premium to an insurance company, and the insurance company has agreed to cover them by insurance.

 

Insurer
An insurer is the insurance company. An insurer offers protection through the sale of an insurance policy to an insured.

 

Liability
Liability is when a person or organisation is legally responsible for something.

 

Policy
A policy is the contract of insurance. It is a written agreement between an insurance company and the insured that puts insurance coverage into effect and details the circumstance when claims will be paid and other conditions of the cover.

 

Pooling
Pooling is when a group of people share something for the benefit of all those involved. In the case of insurance each customer pays a premium when they take out insurance which is pooled together with premiums that other customers pay.  If a customer ever needs to make a claim on their insurance, funds from the pool are used to pay for the losses covered by their policy.

 

Premium
A premium is the amount to be paid for an insurance policy. Premiums are calculated by assessing the risk – that is the likelihood of whatever is being insured being lost or damaged and how much it will cost to repair or replace it. In addition premiums are loaded to cover the insurance company cost of running their business and providing a profit.

 

Reinsurance
Reinsurance is a form of insurance that insurance companies buy for their own protection, ‘a sharing of insurance’. Reinsurance enables insurance companies to insure larger risks and pay for larger losses than they would otherwise be able to. Reinsurance can also smooth out claims costs and remove uncertainty.

 

Risk
Risk is the uncertainty of financial loss. Risk is any situation that involves the exposure to danger or the possibility of something unpleasant or unexpected happening.

 

Underwriting
Underwriting is how insurance companies manage the ‘pool’ of customer premiums. Because not all risks are the same, underwriting involves examining, accepting, or sometimes rejecting insurance risks, and classifying those selected, in order to charge the appropriate premium for each. The purpose of underwriting is to spread the risk among a ‘pool’ of customers in a way that is fair and affordable for the customers and also profitable for the insurer.