Delays with insurance frustrate port company

16:00, Feb 13 2012

Lyttelton Port of Christchurch is frustrated by the delays of "pay-as-you-go" payments by insurers to repair quake damage, months after the port threatened legal action on the issue.

Chief executive Peter Davie said so far Vero and the group of insurers had paid $35.7 million towards repairs but the payout total had stalled at that level for some time.

The port was still in negotiations with insurers over extra payments it wanted to top up that figure.

While the insurers had put forward the idea of a single payment to cover the damage, the port still preferred the idea of a series of progress payments as repairs were carried out, at least in the short term, he said.

"The short term is about making sure we're getting paid to repair the port as we need to."

It is expected to turn into the biggest single corporate claim ever made in the southern hemisphere – somewhere in the order of $500m.

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Davie said about three extra staff had been taken on to deal with the extra work over insurance negotiations and the port rebuild and that number could grow to between six and 12.

Asked if the time delays were frustrating, Davie said: "I think it adds another dimension to our business that normally wouldn't be there.

"So if you look at our business, we've now got a rebuild and an insurance side to business that wasn't there previously ...

"We're always making progress but it's probably not as quick as we would like."

At the company's annual meeting in November, chairman Rodger Fisher said the directors were considering legal action after their lead insurer, Vero, disputed a $20m progress payment for repairs to the quake-ravaged port.

Yesterday Davie did not want to comment further on the possibility of a legal challenge.

A spokeswoman for Vero said the insurer remained committed to settling this claim. Vero would prefer not to discuss the confidential details of this series of claims, she added.

Davie said temporary repairs to Cashin Quay 1 – where coal is loaded – were nearly complete, while temporary work on the container-based Cashin Quay 3 was going well.

Late last year an engineering review saw the port close the LPC head office for further damage assessment.

An interim study on the future of $12m port building in Lyttelton was due in about three weeks, Davie said.

If the structural engineers judged the building fit for repair, there would still have to be a further study on what that work would entail and whether it would be economically feasible, he said.

The Press