Christchurch City Council agrees to $635 million insurance payout

The damaged AMI stadium that can no longer be used due to the February 22, 2011 earthquake in Christchurch. Photo / Getty Images

Christchurch City Council has agreed a $635 million settlement for its earthquake-damaged facilities, it has been confirmed today.

In what is the biggest settlement in New Zealand insurance history, the council announced the full and final conditional settlement with its insurers, LAPP (the Local Authority Protection Programme Disaster Fund) and Civic Assurance's principal reinsurers.

The payout is the result of five years of complex and challenging negotiations.

The global settlement covers all of the council's 1600 individual above-ground asset claims and business interruption losses which occurred in the devastating 2010 and 2011 quakes.

Christchurch Mayor Lianne Dalziel said the insurance settlement comes as "an enormous relief".

"Knowing our full and final insurance settlement gives us certainty as we begin work on our 2016/17 Annual Plan," she said.

The agreed amount of $635 million is in addition to the $201 million paid by LAPP to Christchurch City Council for damage to the council's below-ground assets in 2012 and the settlement with the Earthquake Commission of $59.4 million.

Peter Gudsell, the council's chief financial officer, said the council will receive full payment in February.

"Achieving agreement means the council will not be reliant upon progress payments from the insurer as and when agreed reinstatement work is undertaken," he said.

"This gives council far greater flexibility and certainty in terms of what and when assets can be repaired or replaced."

The council had lodged a claim for $920 million but has settled for $635 million in what Ms Dalziel called "a fair deal for all parties" and means the council will avoid costly litigation.

Tim Sole, chief executive of Civic Assurance, said all parties had hoped that mediation would succeed in a deal.

"It provides the council with an upfront lump sum payment, avoids the prospect of costly and prolonged litigation, and enables the city, Civic and its reinsurers to move on."