Japan’s approach to earthquake insurance pricing, claims assessment, and dispute resolution is under examination by New Zealand legal and insurance specialists as they reassess how the local system is likely to perform after a major seismic event.
Associate Professor Rohan Havelock, an insurance law specialist at the University of Auckland currently researching in Japan, is analysing how Japan’s earthquake cover is structured and where it differs from New Zealand’s mixed public–private model. He points first to risk-based pricing. In Japan, earthquake premiums vary according to a building’s location, age, construction, and assessed seismic strength, aligning premiums more closely with underlying hazard and vulnerability. In contrast, New Zealand’s statutory natural hazards cover is funded by a flat levy of 16 cents for every $100 of insured building value, regardless of the property’s risk profile. “This means that owners of more risky homes are subsidised by owners of less risky homes, and also that there’s no incentive to strengthen homes against earthquakes, or for owners to move away from earthquake-prone areas,” he said.
A second difference is the way loss is measured. Japanese earthquake insurance places less emphasis on calculating an itemised dollar loss and instead classifies damage into four categories: total loss, large half loss, small half loss, or partial loss. Benefit levels are tied to those categories, and claims are generally settled by cash payment rather than insurer-managed repairs or reinstatement projects. Havelock said this structure can allow faster assessment and may reduce disputes over the scope of works, because once a loss category is agreed, the payment is more clearly defined and less dependent on detailed costings.
Third, Havelock describes Japan’s dispute resolution pathway. Insurers routinely offer re-inspection or internal review of claim decisions at an early stage, which he says resolves many disagreements before they escalate. “Insurers routinely offer re-inspection or review of decisions, which resolves a large proportion of disputes,” he said. Where issues remain contested, most cases move into a “Financial Alternative Dispute Resolution” process involving an experienced mediator. The process is non-adversarial and does not involve filing or hearing fees. “Very few disputes proceed to litigation,” Havelock said.
Havelock’s work sits against the backdrop of New Zealand’s own earthquake insurance history and subsequent reforms following the Canterbury sequence. New Zealand’s framework combines private homeowner policies with statutory natural hazards cover administered by the Natural Hazards Commission Toka Tū Ake (NHC). Statutory cover responds first up to prescribed limits for residential buildings and land, and private insurers generally cover losses above those caps for building damage.
The Canterbury earthquakes generated more than 460,000 claims on the former Earthquake Commission (EQC), exceeding its capacity and contributing to delays, extensive litigation, and the failure of two insurers. Some claims remained unresolved many years after the events. Since then, Parliament has introduced the Natural Hazards Insurance Act 2023 and the Contracts of Insurance Act 2024, which adjust roles, responsibilities, and policy terms in the system. Havelock nonetheless considers that the continued reliance on a dual public–private structure could expose the system to similar pressure after a future large quake. “There’s a need for more carefully considered reform, especially relating to standard terms, handling of claims, and dispute resolution,” Havelock said.
Claims practitioners say experience from Canterbury remains relevant as severe storms and floods become more frequent and complex, adding to the volume and complexity of property claims. Christchurch-based claims preparer Dean Lester said many post-quake disputes could have been avoided if key insurance principles and wordings had been applied more consistently from the outset. “Insurance plays a critical and crucial role in a recovery. However, the release of insurance funds and the claims process itself can be so delayed that it is grossly unfair to homeowners and businesses,” Lester said. He describes insurance as a “fundamental cornerstone of modern society and the economy, acting as a risk-mitigation tool that enables stability, investment, and growth.” He added: “By transferring risk from individuals and businesses to insurance companies, it acts as a safety net that facilitates recovery from unexpected losses and fosters confidence to engage in economic activities.”
Lester notes that the Earthquake Insurance Tribunal continues to hear cases, while the NZ Claims Resolution Service – which began as the Greater Christchurch Claims Resolution Service – remains active. He points to a High Court earthquake litigation list of 188 pages, comprising current and historic disputes. “What is needed is more visibility of the issues being resolved and perhaps asking – how did we get here?” he said.
Lester, who also works with policyholders in storm-affected regions, said earlier access to experienced and independent claims preparers can affect the speed at which claim payments are released and how disputes are managed. “Unfortunately, some insurers continue to frustrate claims, which is costly to people both financially and wellbeing-wise. What we have experienced in Canterbury when it comes to insurance processes – and I include NHC (formerly EQC) in that – would very likely save others from having to go through similar pain and distress,” he said.
Debate over earthquake cover design and dispute processes is occurring alongside initiatives by government agencies and industry bodies to increase focus on pre-event risk reduction. In November 2025, the National Emergency Management Agency (NEMA), NHC, and the Insurance Council of New Zealand | Te Kāhui Inihua o Aotearoa (ICNZ) issued a joint statement supporting more coordinated work on risk reduction and resilience to protect people, property, and communities. “On a personal level, it’s crucial to build your own resilience first, and that of your whānau and community. If we invest in our resilience now, we’ll be more prepared when we’re tested later,” John Price, NEMA’s director of civil defence emergency management, said.
NHC chief executive Tina Mitchell said the commission funds research, public education, and risk-reduction initiatives and is working to ensure decision-makers have access to natural hazard data. “In a country at high risk of natural hazards, it is important that we all make evidence-based decisions for safer buildings and land use planning. A key priority for NHC is establishing a national view of risk so it guides resilience efforts in all its forms,” Mitchell said.
ICNZ chief executive Kris Faafoi links pre-event risk reduction to the long-term availability and affordability of private cover. “The likelihood of more intense and severe weather events is rising, and New Zealand must prioritise risk reduction to protect communities and maintain insurance accessibility for all Kiwis,” Faafoi said. He has called for quicker progress on New Zealand’s Climate Adaptation Framework and continued cross-sector cooperation. He notes that “avoiding high-risk areas and investing in resilient infrastructure isn’t just the right thing to do; it makes economic sense.”
