Labour would intervene in the insurance market within the next 12 months if private insurers or their reinsurers did not come to the table writing new policies in quake-hit Christchurch, leader Phil Goff says.
Goff announced the party’s earthquake policy last week, saying if Labour were in government after the November 26 election, it would be prepared to act as an insurer of last resort in Christchurch if the private market did not find a solution to the impasse that is seeing insurers wary of expanding their books and writing cover for new customers.
Insurance Council CEO Chris Ryan said last week that while all private insurers and the Earthquake Commission had secured reinsurance for the next 12-24 months, reinsurers might be reluctant to provide further natural disaster cover in New Zealand beyond that.
"While it is a fact that all the major insurers in New Zealand currently have reinsurance cover for at least the next 12 months, beyond this, 100% reinsurance cover is not a guaranteed feature of the insurance landscape in this country," Ryan said on Friday.
That could mean private insurers here would be reluctant to write policies if they were not sure whether they themselves could secure reinsurance again once their current cover expired, which could lead to a rebuilding stalemate in the city.
Minister for Earthquake Recovery Gerry Brownlee, who has just returned from meeting the world's biggest reinsurance companies in Europe, attacked Ryan for his comments, saying he was scaremongering.
"Until you have individual insurers stepping up and saying they no longer want to be in our market, I don't believe the Insurance Council's position is credible," Brownlee said on Friday.
But Labour leader Goff said Ryan’s comments needed to be taken into consideration as they had cast doubt on whether reinsurance would be available more generally for earthquakes in New Zealand.
“If that’s the case, then the government will be forced, whatever it might think, to take some action to ensure that there is proper protection in place,” Goff told media at his regular Monday afternoon press conference.
Goff said his position had always been that the best option was for the insurance industry to “take up its responsibilities to provide that insurance”.
“If however, it declines to do that, if it refuses to do that, despite pressure from government, then government has a choice of either standing back and nothing happening, and people not able to get into their homes or their businesses and recovery not occurring in Canterbury. That is not an option you can choose,” Goff said.
“I don’t believe that you can wait for anything like that [12-24 months] for the process of rebuilding and recovery to happen in Christchurch,” he said.
“I’m not going to get into whether it’s six weeks or six months, but if the insurance timeframe for Canterbury was to be 12 months to 24 months, that’s too long.”
(Updates with video of Goff)
8 Comments
This man is an absolute lunatic. We can thank God he will never be the PM .
Why should I, as a taxpayer, have to bear the insurable risk of re- insuring Chch?
If this ever comes to pass I am emigrating to Australia.
Governments are seldom if ever able to run businesses profitably, and Insurance Companies are a highly complex , small margin, very high risk business , even without earthquakes .
Just how does he think this Government could ever establish a major insurance business without exposing finanacially - hard - pressed New Zealanders to unsustainable risks which could take generations to pay off .
Pure folly and just plain dumb
The simple solution would be to legislate new building codes where repairability was paramount.
Slab on ground floors should be out unless directly on river gravels.
Make buildings repairable for under 20% of the total cost and there would be no insurance problems.
Agree Chris J.
The authorites hold all the cards and can dictate that houses are built on sound land to bullet proof standards. There are plenty of undamaged houses left in Christchurch that are evidence that this is relatively easy to achieve. If the traditional insurers are not satisfied by that, then there would be little or no risk for the Govt to step in. An opportunity to create another State Insurance ie a valuable State asset. I suspect that things have become bogged down in a host of vested interests. Clear leadership is conspicuously absent.
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