tag:blogger.com,1999:blog-2830084253401570472.post8523709807546587487..comments2024-03-28T09:22:36.967+13:00Comments on Offsetting Behaviour: Christchurch insuranceEric Cramptonhttp://www.blogger.com/profile/15831696523324469713noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2830084253401570472.post-60265882696175711382011-07-05T20:51:37.211+12:002011-07-05T20:51:37.211+12:00@Alfred: I'd pay a fair amount for such a cont...@Alfred: I'd pay a fair amount for such a contract, and not just as a hedge. Cool that such things are used; it seems obvious enough that I couldn't have been the first to think of it.<br /><br />@hefe: Not quite. Invest with a crazy old guy who lives frugally and the government will bail you out for that too.<br /><br />@Duncan: I didn't know that the EQC levy covered the value of the land rather than simply the cost of repairs; I'd worried about the case where a tsunami would make the sand spit disappear entirely. <br /><br />Nice point on valuations. When our 2007 valuation came in, I thought it higher than what market price would likely be ($65K more than what we paid for the place in 2005), but didn't bother appealing. But if downwards appeals are a one-way bet...Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-19204607975578819762011-07-05T20:19:37.475+12:002011-07-05T20:19:37.475+12:00Actually the EQC (funded by a levy included as par...Actually the EQC (funded by a levy included as part of house insurance) covers damage to the land under the house and within 8 meters of the house. The cover is either the value of the land or the cost of repairs, whichever is lower. I'm guessing that, in the case of the red zone, the value of the land is the lower of the two; since you'd really need to remove all the houses to remediate the land properly. <br /><br />Obviously the government is topping up the difference between the land valuation and EQC's maximum exposure of $100k.<br /><br />For people who believe their ratings valuation is too low there apparently will be an appeal process with CERA to get the valuation redone(process yet to be defined). <br /><br />I'd just note that there is similarly an appeal process for local government ratings valuations when they are done - so if you thought your ratings valuation (meant to be a commercial valuation) was too low back in 2007 you could have appealed it then, of course that would mean your rates go up.....Duncannoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-53779550363318239262011-07-05T19:55:16.808+12:002011-07-05T19:55:16.808+12:00No wonder NZ'ers love property - it's pret...No wonder NZ'ers love property - it's pretty much a risk-free investment. Lost your share value - that's your problem. Lost your land - that's the taxpayers problem.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-74146021514994316362011-07-05T09:36:45.288+12:002011-07-05T09:36:45.288+12:00They're called "catastrophe bonds" o...They're called "catastrophe bonds" or "disaster bonds", and are common.<br /><br />They are nice for fund managers as the default risk is quite idiosyncratic. In some cases they could be cheaper than reinsurance to issue, in fact ReInsurers are the biggest issuers of such bonds.<br /><br />How much would you pay for an iPredict contract that paid a dollar given a 6+ earthquake?Alfrednoreply@blogger.com