Council staff broke limits with insurance deal

19:41, Nov 09 2011

Christchurch City Council (CCC) boss Tony Marryatt admits staff went beyond their authority in signing an insurance deal to keep him "out of the loop".

The admission follows Cr Tim Carter's letter to the auditor-general this week asking for an investigation of the placement of the council's insurance and the potential for conflicts that Marryatt as council chief executive could have by also being a board member of its insurer, Civic Assurance.

Carter believes Marryatt should not be overseeing both sides of the expected-to-be more than $650 million earthquake-damage claim, which looked likely to become New Zealand's largest local authority insurance claim.

He said confusion still surrounded the council changing its $1.8 billion above-ground insurance from New Zealand Insurance to Civic, which is owned by the country's city, district and regional councils.

He had been told that council corporate services general manager Paul Anderson signed off the insurer switch but believes the $1.215m premium breached the $500,000 delegation limit for staff.

Council delegation policies also say insurance policies need to be signed jointly by both the chief executive and the vacant post of director of strategic investments.


Marryatt yesterday admitted to The Press the signing had broken delegation limits.

"Paul [Anderson] kept me out of the process and took the decision himself. That is a technical breach of delegations. He was doing the right thing, for he was keeping me out of the loop.

"If he had come to me [about it], I would have had to say: '[Go] away'."

Carter said in the letter to the auditor-general and again to The Press yesterday that proof of who signed the change had not been provided.

"Surprisingly, the council does not have a copy on file of their signed insurance acceptance advice."

In an email to Carter, Anderson said: "CCC does not have a copy of this acceptance and Aon have been unable to locate this in their files."

In another email to Carter, Anderson acknowledged that he and another senior council employee signed off on the renewal.

Carter said Marryatt had been paid directors' fees of $15,000 or more in both 2009 and 2010, yet his position on the board of Civic was not listed in the register of interests in the annual reports for those years.

The emails indicate that the decision to change companies was not reported back to the full council but to the audit and risk committee, but there appears not to be any mention of this in the committee minutes.

Marryatt said it was Carter's right to call for an investigation.

"If that is the process, we have to go through it. Personally I would prefer to have staff doing other things."

Carter said in the letter the council was negotiating the largest insurance claim for a local authority in New Zealand's history.

"I am concerned that our full claim, when finally assessed, will cause Civic Assurance financial stress.

"I am troubled by Mr Marryatt's presence on this board. Although he sits on the board as an individual, where does his responsibility begin and end over the city council claim?

"As a board member ... he has a statutory responsibility to act in the interests of the company. The task of an insurer is to minimise their exposure to risk. He would, therefore, as a board member have to try and reduce the payout to the city council.

"When Mr Marryatt returns to his day job as chief executive of the city council he then has to lead his team – they are all his employees by law – to maximise the claim to Civic Assurance and minimise the shortfall of funds for the ratepayers of Christchurch.

"It seems to me that either way Mr Marryatt is conflicted and can be either on the board of Civic Assurance or the chief executive of the city council, but not hold both positions," Carter said.

Carter has asked the auditor-general to investigate several questions relating to the insurance and Marryatt's role.

Marryatt reassured councillors yesterday that he had nothing to do with the insurance switch.

The Press