Earthquake Recovery Minister Gerry Brownlee has been unable to convince international reinsurance companies to cover new policies in Christchurch - increasing the possibility the Government will step in as a back-up insurer.
Mr Brownlee travelled to Europe last week but was unable to convince the companies that Christchurch was safe enough to insure. The lack of insurance has effectively stalled much of the rebuild.
Speaking on The Nation after his return, he said they wanted evidence seismic activity had settled, despite him assuring them new building areas would be on safer land and building codes would be boosted to ensure buildings could withstand larger quakes.
Last week, Mr Brownlee told the Herald he would not rule out the Government stepping in as an insurer if the private insurers continued to hold out. All options were being considered, but it remained his preference for the private market to continue to provide the insurance.
Labour is due to release its alternative recovery plan in Kaiapoi today and leader Phil Goff has previously called for the Government to consider becoming the "insurer of last resort" to kickstart the rebuild.
Yesterday he would not comment on whether the suggestion formed part of Labour's policy. He said the news from Mr Brownlee was disappointing.
"It's obviously disappointing if he hasn't been able to get any assurance about the availability of reinsurance or the readiness of New Zealand insurers to issue new policies. What that does is simply put the recovery on hold.
"It means people who desperately want to rebuild and get on with their lives are continuing to face obstacles in doing so."
Mr Brownlee said the reinsurance stand-off should not affect existing policyholders - only cases where new insurance was required.
Mr Brownlee said he did not know how long it might be until Christchurch settled down enough, but he expected it to be a "relatively temporary position". Christchurch ranked at about eighth or ninth on the list of most risky places for insurance.
"Earthquakes are not like west coast wind in the United States where you expect that annually. As this event settles, the incidence of return will be very, very low indeed."
He also believed insurance would increase across the board everywhere because it had been such a bad 12 months.