By Hannah Lynch
The latest swarm of earthquakes to hit Christchurch is unlikely to cause a material increase in the government’s exposure to AMI, the Treasury says.
The Canterbury region has been rattled with aftershocks over the holiday period following a magnitude 5.8 earthquake on Dec. 23, which caused power and phone outages and further liquefaction in the city’s eastern suburbs.
The government is taking on the quake-related claims of AMI, the insurer it bailed outlast year, as part of a deal to sell the rest of the company to Insurance Australia Group. A Crown company will be established as soon as next month to manage AMI’s $335 million worth of earthquakes liabilities, likely to net out at about $120 million after the sale.
The $335 million is “only an estimate at this stage,” said Serene Ambler, spokeswoman for Treasury. “We don’t expect any material change as damage doesn’t look so significant that AMI will incur a significant amount of (new) claims,” Ambler said.
The new Crown company is likely to start in February once the sale of AMI to IAG is completed but until then it is business as usual at AMI, she said.
IAG announced in December it would buy AMI, the Christchurch-based insurer, for $380 million, excluding the earthquake claims.
IAG today said it has finalised catastrophe reinsurance for the 2012 calendar year, with cover of up to $4.7 billion, compared to $4.1 billion in 2011.
The combination of covers in place at 1 January 2012 results in maximum first event retentions of $150 million in Australia, $130 million for New Zealand and $50 million for the UK,” IAG said in a statement to the ASX.
(BusinessDesk)
29 Comments
But I am upset Mr Wolly. In fact deeply troubled by the thought of having to pay via my taxes, for some ChCh private dwelling that fell over in an earthquake. Some ChCh person willing to cover my investment losses on a daily basis are they? Not bloody likely.
As for the National party, I live in the middle of horse country, where the National Party males act like horses, and the females look like them. Sod That.
And you have every right to be! This country only caters for/to the most ungrateful who yell and scream when life deals them a reality check, They then look to others to bail them out due their own naivity, their own stupidity, their belief that government is here to save us all. Unfortunately they never get the fact that the more control you give up to government, be it parenting, self reliance, financial security, education..............then the more true democracy, self determination and basic freedoms we all enjoyed are slowly eroded.
Put it this way, IF NZ were to have just ONE more city fall to an earthquake (highly likely in the next 30 years atleast so good luck EQC) who would foot the bill? The insurers? All those suckers who paid for years and years thinking "insurance" is a real honest business/industry will/are finding out the 'con' . Same will happen to all those mug Kiwisaver investors a few years from now.
NZ socialism is at an all time low due too the mentality of most NZ people thinking "there is a free lunch for everyone and it costs us all nothing"
Put that down to the inbreeding moa man....Lesson for you here...never ever ever believe the BS and spin about free markets and especially do not swallow crap from National that there is a gulf between private losses and public expenditure....when the brown stuff splatters the walls the state cheque book is whipped out and the paper starts flying out the window...
Perhaps you could tell me, speckles, why is the Govt is buying 5000 odd properties?
The houses themselves are wrecked, the land underneath is unstable, there is vrtually no residual value. In other words they are worthless. I can't see any reason to spend public funds this way.
Can't speak for the Government however can see where the benefits flow...
If you place your glasses on... great sound bite in an election year don't ya think....spill over benefits ...elements of the Insurance industry are getting a free pass an't they...,secondly, I understand nearly a third are housing NZ properties so net effect is nil on this part of the portfolio wrt to the Govt. The next largest group represents a good number of property investors with multiple properties..wonder who they support...lastly a few little people that get a handout which will buy them very little in the open market.
They can only hope.... those with a rebuild in their insurance policy can take the Government land parcel and move on...
But if they have a valid insurance policy, as you suggest, why is the Govt getting involved? There is an existing private contract, in the form of the policy. The courts are there as a remedy for policy holders who feel the Insurance companies arn't fufilling thier commitments.
"The government is taking on the quake-related claims of AMI, the insurer it bailed outlast year, as part of a deal to sell the rest of the company to Insurance Australia Group.
A Crown company will be established as soon as next month to manage AMI's $335 million worth of earthquakes liabilities, likely to net out at about $120 million after the sale."
http://www.nzherald.co.nz/insurance/news/article.cfm?c_id=234&objectid=…
So the crown is going to be both the insurer and the beneficiary of the policy.
Taxpayer funds in one end and out the other. Doesn't sound like much value to me. Even worse once the mortgages get paid back to banks in the middle of the transaction.
Who is going to take the haircut on this deal do you think?
@Moa Man: Your opinion that these insurance policies are worthless does not resonate with our experience. We live in the residential Red Zone beside the Avon River, our insurer (Aust-owned) has deemed our house as a rebuild, and, after considerable negotiations, we have accepted a settlement figure in excess of $500k which we will apply to build a new home on the other side of Chch, on what we believe is good ground. Many people we know in similar situations have reached settlements with their insurers, so for you to imply that insurance contracts are simply a "con" perhaps says more about your underlying attitudes than it does about the reality in Chch.
We didn't ask to be RedZoned. We could have rebuilt here with a different foundation system (and cladding PDK - you make a couple of good points in your rant) but the Government has denied us that option and, in effect and in collusion with the CCC and CERA, is forcing us off our land. For you to call that a "Govt bailout" we find both inaccurate and rather offensive.
I fail to see what your complaint is here. You have achieved exactly what I have been advocating. I.E.
You have settled a valid claim with your Insurer , without any taxpayers funds being required.
I struggle to understand why you find that offensive, but so pleased am I, by the example you have set, I will overlook your attributions to me via double quotes, to comments I have not made.
Apologies you did not use the exact words I ascribed to you,your expressed views do seem to me to be very similar to the bloggers who did. No need to congratulate us for settling with insurer - this came about through LUCK mainly, i.e. our house was damaged enough to be too expensive to restore to its preEQ condition. Due to the decisions of the Government, people with identical insurance policies will get different outcomes based on how much damage their property suffered. Commonsense would lead one to think that those copping the most damage in a disaster come off the worst, the Key government has turned that on its head.
We ARE dining on a large portion of taxpayer funds perhaps - our EQC claims all up are close to $200k, and that doesn't include the claim for land damage. What that figure will be we will never know as the Crown will take over that claim, but time will show that the Crown will have to prop up EQC by several Billion (not hundred million as Key/English claim) dollars. The EQC model has been shown to be a house of cards, it can only withstand fair weather.
Finally, agree with you 100% re SCF bailout. Both Clark and Key govts to blame, should NEVER have guaranteed banks and fin coys, though, could have indicated they might have put in extra capital into Kiwibank if required at the time. That would have forced Oz parent coys of other NZ banks to do the same or face catastrophic collapse of their NZ operations if things got dicey.The brinkmanship would have been entertaining at least! Kiwis and their politicians need to get a pair.
I think so goNZ, I have claimed again as more damage with aftershocks, have not had a second visit from EQC yet. My mother New house brought with from Cera money (the old house gone in September 2010 quake), has suffered damage in latest round, she is claiming again. A number of people I have talked to have claimed again. It will be under the $100k threshold, so EQC will be fixing / paying out on the damage (i.e the taxpayer) they need to hold off fixing ANYTHING until they know aftershocks wont keep happening, how long that will be is anyone guess, but costs will just keep mounting up at this rate.
It boils down to ignorance, and arrogance.
We have folk who - in an earthquake-risk country - build high and/or heavy. I'd never own a brick house in NZ, and I understood why when I was 20.
Jointly or severally, we were arrogant enough to think we were superior to the laws of physics.
Same with leaky homes. Jointly or severally, the big picture is that we were too arrogant, and ignored the fact that rain comes down, that timber rots, and that penis radiata is cardboard unless saturated with poisons.
Rebuild? CBD's are yesterday. Communications and the future say so. Private dwellings can be built that even float atop the land, on flexible couplings/services. They can be built light too. And very affordable. I reckon I could market a 100 sqm house in shell kitset form (lockup stage, painted both sides/insulated) for around $50,000.
There are examples around. Anyone interested is very welcome to visit.
Thanks PDK might take you up on that offer if we head south at some point. I must confess that, when we bought our riverside property 7 years ago, I did note the "high risk of liquefaction" on the LIM, but in my ignorance/arrogance, thought "Chch doesn't get EQs" (I grew up in Wellington).So guilty on that count - I put more thought into assessing the flood risk. At least we took out full replacement insurance cover - you could also argue that the insurers didn't assess the risks accurately, and so also got burned.
Life is perverse - in hindsight we bought a lemon, but will in the end be able to trade it for something much better at little cost other than a whole heap of stress.I don't discount the stress though - it can be a killer.
I've come to agree with you on claddings but am curious as to what lies between your carpet/tiles/floorboards and the ground. My personal inclination at present is that, for the purpose of obtaining affordable insurance cover if for no other reasons, I would not build on ground at risk of liquefaction, lateral spreading, or inundation as a result of climate change induced sea level rise.
Just a caution though - my neighbour was down our street in Feb when the big one struck and saw(and felt) the ground lifted several feet into the air and then dumped back down like a sack of potatoes. For an event like that your connections might need to be extremely flexible! And of course your problems merge with everyone else's outside your letterbox.
Secret Government Business and Immigration and international ownership of land .. in AU .. but if its happening there, it sure as heck is happening in nz
Mystery $1.3b bid to buy NZ asset
http://www.stuff.co.nz/manawatu-standard/business/6219771/Mystery-1-3b-bid-to-buy-NZ-asset
A mystery foreign group won approval to buy a big chunk of New Zealand in a secret $1.3 billion deal last year.
Do you know what the $1.3b mystery asset is? Email us at newstips@stuff.co.nz
The sale did not proceed but the deal inflated figures for approved foreign investment in New Zealand to almost $1.9 billion last year, almost five times more than the previous year.
A group opposed to foreign ownership, Cafca, believes the deal was approved in June. But all details, including the foreign buyer's name and the seller's name, were kept confidential, as well as the price. The sale could still go ahead in future.
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