Queenstown Lakes District Council insurance premiums have gone up 116 per cent – for less cover.
Finance boss Stewart Burns says the council’s “material damage” and “business interruption” policies will cost $594,715 for the current financial year – a hike of $320,000.
Like other local bodies, QLDC was forced to find replacement cover after Civic Assurance, a co-op owned by local bodies throughout the country, was unable to obtain reinsurance after the second Christchurch earthquake.
Burns says QLDC had agreed premiums with Civic for a year from May 1 but the co-op had to cancel cover on June 29 with one month’s notice, leaving the council scrambling to find replacement policies by July 29.
The new insurers are a consortium led by Vero with 40 per cent of the risk, joined by American Home Insurance brand Chartis with another 40 per cent and Australia’s QBE with the balance.
“As with most other local authorities, no single insurer was prepared to take 100 per cent of [QLDC’s] risk,” Burns says.
He reassures ratepayers there will be no impact on rates bills for the current council year – “The basic approach is to reduce loan repayments and renewals to cover the [extra costs].”
However, the new policies also contain unprecedented exclusions and excesses which saddle QLDC and ratepayers with risks previously borne by the insurer.
• no cover at all for council assets inside the 1999 flood zone – an area approximating about one-third of the resort CBD
• a $500,000 excess on flood damage elsewhere
• a $25,000 excess – previously $5000 – on all other claims
• and a complete exclusion of cover on all underground assets such as water and sewerage systems.