Europe players may lower premiums
A government-funded city development body has been wooing European insurers to try to smooth the way for better insurance conditions and cheaper premiums for Cantabrians.
A team from the Christchurch Central Development Unit recently returned from Europe where it visited large insurers such as Lloyds of London, as well as Swiss Re and Munich Re, the world's biggest reinsurers based in Europe.
The response by Lloyds members was positive, in response to presentations on Christchurch's outlook for reduced seismic activity, CCDU investment manager James Hay said.
Presentations to the New Zealand Earthquake Recovery Symposium in London by Hay, Holmes Consulting structural engineer John Hare and GNS Science principal scientist Kelvin Berryman covered a variety of topics but pointed towards the commercial rebuild of Christchurch's central business district as being more than viable.
The framework for developing commercial projects in the city were comparable to Auckland and Wellington, Hay said.
One of the main topics in the London visit to Lloyds was about insuring Christchurch, and giving a positive message about risk.
"That was about future insurability . . . to unlock investment in Christchurch the first key in the door is the risk capital. So you don't get debt and equity until you've got confidence around insurance."
Berryman, Hare and others gave technical briefings about the nature of seismic risk to the 200-300 in the room, many of them linked to Lloyds insurance.
They pointed to the declining magnitude of the seismic events.
"There's perceived risk in Christchurch, then there's the actual risk. It's putting that in its international context and putting it in its national context and just saying actually there was a very, very rare event that occurred on the 22nd of February."
The response was positive from the Lloyds grouping of syndicates who could back Christchurch for insurance needs. "We've got a very strong feeling that the capacity is there, the willingness is there and we had a very good reception from Lloyds. The team then went to the reinsurers in Europe."
One of the CCDU team members was Alison O'Connell, who had previously worked in a senior executive role with Swiss Re, but had moved to Christchurch before the earthquakes began.
Given the declining risk of a further earthquake catastrophe, CCDU viewed Christchurch as offering a safer environment than perceived in Europe. GNS had its own modelling of the earthquake risk, but that differed from the modelling used by the European insurers, which showed higher risk in Canterbury, Hay said.
"The reinsurers primarily use two different models to model catastrophe risk around the world, and GNS has its own model. So we were just telling them they need to update their models to understand the true nature of risk in Christchurch."
Holmes Consulting's Hare had talked to the London grouping about the relative costs of rebuilding commercial buildings in Christchurch.
"There is no build [cost] premium in terms of seismic risk in building in Christchurch relative to Wellington or Auckland, based on the new [technical earthquake building] codes and all those sorts of things," Hay said.
Hare, a structural engineer, had also prepared work for potential Christchurch investors on what technical building requirements would be needed in the city compared with Wellington and Auckland.
CCDU has also been working with the boards and executives of the large Australasian banks so it can advise developers on available debt funding, knowing that debt will be needed as a cornerstone to the rebuild.
"They [the banks] are fundamentally interested in this, so that's a good outcome," Hay said.