Taxpayers and ratepayers will meet the cost of repairing any further earthquake damage to council-owned infrastructure in Christchurch and Waimakariri if they can't reinsure when their policies run out on Thursday, the Government says.
Civic Assurance, which is wholly-owned by territorial and regional authorities and insures most councils, has said it will not be offering property insurance for any councils after June 30.
It is facing quake-related claims of $750 million and chief executive Tim Sole said the company couldn't buy reinsurance.
"That's why we're not offering any further property insurance...for any council in New Zealand," he said
Cabinet discussed the councils' plight today and a spokesman for Finance Minister Bill English said Civic Assurance had also said that most councils should be able to get some insurance cover, but at higher premiums.
"In regard to Christchurch and Waimakariri, if there is further damage to essential infrastructure it will be repaired -- it is just a question of where the balance of costs fall between ratepayers and taxpayers," the spokesman said.
"There is already provision for this kind of cost sharing in the Civil Defence and Emergency Management Act and the Government has said it will be mindful of Christchurch's reduced ability to pay."
The spokesman said the Government was working with insurance companies, the Earthquake Commission and local government to find a way through the issues.
Labour leader Phil Goff said councils couldn't be hung out to dry.
"They've got to be able to get reinsurance, that means central government working very closely with local government to try to get a deal to get that reinsurance in place and that's what I imagine they will do," he said.
Meanwhile insurance company Tower has reassured quake-hit Christchurch residents it will honour contracts with people in the city's devastated red zone areas.
Group managing director Rob Flannagan said the company had received queries from a number of concerned customers.
He said Tower would honour contracts whether customers accepted the Government's offer of purchase for the entire property at 2007 valuation ratings, or accepted an offer for the land only and then dealt with their private insurers about their houses.
NZPA and NBR staff
Mon, 27 Jun 2011