Insurance won't cover Canterbury infrastructure costs

9:02 pm on 27 June 2011

The Government says the cost of future repairs to essential council infrastructure in Canterbury will be paid by taxpayers and ratepayers - not from insurance.

Civic Assurance, which insures 46 of the country's 78 councils, says it won't be offering any council, including Waimakariri District and Christchurch City councils, cover from Thursday when their policies expire.

It says it's facing $750 million of earthquake-related claims from the Christchurch and Waimakariri councils, and as a result it's been unable to secure further re-insurance.

The Finance Minister, Bill English, says while most councils should be able to get cover elsewhere, repairs for future damage to infrastructure in Christchurch and Waimakiriri will be paid for by ratepayers and taxpayers.

Mr English says there's already provision for this kind of cost sharing in the Emergency Management Act.

But he says the Government is mindful of Christchurch's reduced ability to pay.

Civic Assurance will end the cover when the councils' policies expire on 30 June because it cannot get reinsurance.

It says all councils other than Christchurch and Waimakariri should be able to get cover elsewhere, but at higher premiums.

Christchurch City Council general manager of corporate services Paul Anderson, says the council needs material damage insurance for about $2 billion worth of assets.

Mr Anderson said the council is continuing to try to get insurance, though premiums will be higher and excesses may also rise. In the event it is unsuccessful it will hold discussions with central Government.

Waimakariri District mayor David Ayers said that it will be a serious problem unless the Government can help the council.

"The Waimakariri council has prudently insured what it could insure, and if we can't get insurance on our assets, that's a real threat to our ratepayers and for our earthquake recovery."

The head of Local Government Lawrence Yule says councils outside Christchurch and Waimakariri are facing higher premiums for above ground assets.

But Mr Yule says and the amount of cover being offered for underground assets is about a quarter of what it was before.