Taxpayer-backed quake insurance on Govt list

Earthquake Recovery Minister Gerry Brownlee has been in Europe since last week meeting international reinsurance companies. File photo / Mark Mitchell

A huge taxpayer-backed financial guarantee is among options being considered to break the insurance deadlock delaying the rebuilding of Christchurch, says Earthquake Recovery Minister Gerry Brownlee.

Mr Brownlee has been in Europe since last week meeting international reinsurance companies who give financial backing for private insurers providing cover in Christchurch and elsewhere in New Zealand.

He and a delegation of officials have given them geotechnical information about the land in Christchurch and assured them that new building codes mean they do not face an inordinate risk in covering New Zealand homes.

Labour leader Phil Goff last week urged the Government to investigate whether it should become "the insurer of last resort" to kickstart the repair and rebuilding of Christchurch homes, which he said had stalled because of the unavailability or high cost of insurance for them.

Asked whether the Government would consider that, Mr Brownlee told the Herald: "We haven't closed off any review of a number of options."

Speaking from Monte Carlo yesterday after addressing an annual conference of reinsurers, Mr Brownlee said: "We wouldn't be inactive if it was the difference between the recovery getting under way and nothing happening".

But the "best option" was for reinsurers to resume giving cover, and the Government "would be very cautious about entering a market like that".

Mr Brownlee reportedly told the conference he was "firmly in the camp of having the private market participate" in insuring Christchurch and that a bigger government role was a "slippery slope".

But he also said: "Even the most extreme right-winger would look for quick solutions."

Mr Goff said yesterday that Mr Brownlee's comments were "interesting, particularly in conjunction with what Chris Ryan of the Insurance Council has been saying - that New Zealanders may not be able to buy insurance cover for earthquakes".

"Is Brownlee softening us up to say his trip has failed? He's assured us in the past that the insurers won't leave town."

Mr Brownlee said the reinsurers were offering cover to the local insurance companies, but the issue was one of price.

It was hoped reinsurance would become more affordable once the frequent tremors that have followed strong quakes in September last year and February and June abated.

Mr Ryan, the Insurance Council chief executive, said his organisation would prefer the Government to stay out of the reinsurance market.

"We are doing everything here as an industry to make sure the reinsurers return," he said.

Government involvement was not necessary.

Another industry source said that through its guarantees, the Government was already the insurer of last resort for the Earthquake Commission and hard-hit private sector insurer AMI.