New Zealand’s Earthquake Commission (EQC) has ‘blown through’ its funds, after several major earthquakes in recent years and its coffers are expected to run dry early next year, says local media. EQC's National Disaster Fund (NDF) has now dropped below NZ$200m (£101m), the pre-agreed point at which the country’s government moves to step-in, and is on track to be fully depleted during the first quarter of 2019. The fund currently sits at NZ$171m (£86m), a far sight from the NZ$6.4bn (£3.21bn) available just before the Christchurch earthquake struck in 2011. There was a large earthquake in 2010, followed by a second major quake several months later, in 2011, which killed 185 people. Claims that arose from those earthquakes left insurers nursing claims in the region of NZ$19bn (£9bn). “This [bailout] does not come as a surprise,” Tim Grafton, chief executive of the Insurance Council of New Zealand, told Reactions. “Because the EQC scheme has always had a Crown guarantee and because the scale of losses from the Canterbury and then subsequently the Kaikoura earthquake depleted the NDF, which had built up to about NZ$6.4bn prior to 2010, as well as the reinsurance purchased for the Canterbury events.” A crown guarantee means the New Zealand government has to bail out the national disaster agency if need be. In 2016, an earthquake hit the country’s upper South Island, killing two people, but also taking the main highway and railway line out of action for over a year due to landslips, costing local insurers millions in business interruption claims. Risk modeller AIR Worldwide put an estimate of up to NZ$3.5bn (£1.7bn) for insurance and reinsurance industry losses from this event. Most of the residential property damage was covered by the EQC. “Additional claims have been brought to EQC over the past year or two for failed repairs and damage that was not identified at the time which have added further costs that cannot be met by any other means than the Crown guarantee,” added Grafton. There has been anger from the public of the handling of claims since the 2011 earthquake in Christchurch which levelled most of the city’s centre and is still being rebuilt. Many claims remain unresolved and for those that were, some insurance pay-outs have not been enough to cover losses and claims processing has been slow. The government EQC Minister said it was forecasted the fund would run out, but that this was due to the sheer number and frequency of claims. He said the EQC had budgeted appropriately, and the depletion was not due to financial mismanagement or negligence. The EQC was founded in 1945 following on from the damage caused by the Wairarapa earthquake in 1942 which had decimated a region of the country’s North Island. It covers all of New Zealand’s residents for losses sustained from earthquakes, natural landslips, volcanic eruptions, hydrothermal activity and tsunamis. It's the first time in its history that the commission has needed a government bailout. The NDF, which provides resources to EQC, is built up from the EQC levy on residential insurance policies and investment income from money held by the fund. In November 2017, EQC levies were increased from 15 to 20 cents per NZ$100 of cover for residential houses. The increase in the levy is expected to raise an additional NZ$26m (£13.1m) in 2017/18 and around NZ$100m (£50.2m) in 2018/19. If there are no further significant natural hazards, the levy increases are expected to see the fund grow to NZ$1.75bn (£880m) over the next 10 years. Without the levy increase, it was forecast to take more than 30 years. EQC has a NZ$5.5bn (£2.76bn) reinsurance programme on which it has a NZ$1.75bn excess. EQC currently... CLICK HEADLINE TO READ MORE!