Record $635 million insurance payout for Christchurch City Council video


The festive season has delivered the Christchurch City Council the present it wanted most — a global insurance settlement.

The Christchurch City Council will get a global settlement of $635 million from its insurers for all its quake-damaged facilities, including Lancaster Park.

The council had lodged insurance claims worth $920m for its above-ground assets, but settled with its insurers – the Local Authority Protection Programme and Civic Assurance – for a lesser amount to avoid time-consuming and costly court action. 

Quake-damaged Lancaster Park is included in a global settlement the Christchurch City Council has reached with its insurer.

Quake-damaged Lancaster Park is included in a global settlement the Christchurch City Council has reached with its insurer.

The settlement is the biggest in New Zealand history and is on top of the $201m the council has already received for its damaged underground assets and the $59.4m it received from the Earthquake Commission for damage to its social housing portfolio.

Mayor Lianne Dalziel said the insurance settlement was great news for the city going into the Christmas break and came as an enormous relief.

"Our insurance team has worked tirelessly to get us to this position. It is a fair deal for all parties and from a council perspective avoids the need for us having to proceed with litigation around our major facilities," Dalziel said.

The council's settlement with its insurers and their reinsurers – AIG, Axis and R+V – was reached after more than a year of mediation.

The council would get the payment on February 24 and would be able to spend the money as it pleased. It would give the council more freedom to decide what assets were repaired or replaced, and when.

"All concerned wanted to see mediation succeed and Civic believe the council have secured a very good deal with Civic's assistance," said Civic chief executive Tim Sole.

"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."

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The global settlement covered Lancaster Park, which was one of the biggest claims the council and the insurers were wrangling over.

The council had Lancaster Park insured for $143m and believed it was damaged beyond repair so it was therefore entitled to get the full amount, but Civic disputed that.

It said three loss adjustment firms each determined the stadium could be restored for less than $50m.

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With an insurance claim no longer hanging over the stadium, the council could start to make calls on its future. Earlier this year it took Lancaster Park off its list of strategic assets, which technically meant it could sell it without the need for a lengthy public consultation process.

It could also consider repairing the stadium.

Council strategy and finance committee chairman Cr Raf Manji said the insurance settlement meant the council was now able to have an open conversation about the future of stadium.

It could try to sell the stadium 'as is, where is' but there were other options to explore.

"We have to look at whether we can repair it, whether we should repair it and what we think it would cost to repair, then actually start to have a broader conversation about what a new stadium should look like," Manji said.

"We have had approaches to fix the stadium but it wouldn't be to 100 per cent of [the new building] code and you just have to wonder if it would be worth spending money on something unless you did it properly, but that is going to be an open question.

"If we build something it is not just going to be a  standalone stadium," Manji said.

Canterbury Rugby Football Union chief executive Hamish Riach hoped the settlement would make the stadium issue more of a priority in the city's rebuild.

"We have found it frustrating that the stadium has been so disregarded in amongst all the priorities," he said.

"We hope that that conversation can now be held in a thoughtful, planned way rather than pushing the stadium to the depths of the pond because it's somehow seen as being frivolous."

The union remained open to either a repaired Lancaster Park or a new arena. The "devil was in the detail" about to what extent the stadium could be fixed, Riach said.

"If it's 99 per cent of [the new building] code then perhaps that would be acceptable to the citizens of Christchurch. If it was 10 per cent then I imagine that would be a really poor decision."

Canterbury Employers' Chamber of Commerce chief executive Peter Townsend said a settlement much less than what the council claimed for was expected.

"That's probably in the range that was being talked about around the community. Somewhere around the $200m to $400m shortfall."

He said he was looking forward to seeing the detail of the settlement.

"Just to see how they've panned out with the various facets of their insurance settlements compared to what they were expecting.

"Lancaster Park will be a really interesting one to look at and see where they've ended up on that."

His "gut feeling" was that a new stadium would eventually be built.

"But it won't be at the top of the council's spending list by any stretch of the imagination."

The council had three of the top barristers in the country – Bill Wilson QC, Neil Campbell QC, and Tom Weston QC – as well as two law firms representing it in its fight to get the insurance payouts it believed it was entitled to.

It also used 11 engineering firms and consultants to help prepare its insurance claims.

It refused to reveal exactly how much its fight with its insurers had cost in professional fees, but the figure was believed to total several million dollars.


The Christchurch City Council is the last of the city's big property owners to settle their insurance claims.

In December last year, the University of Canterbury got a global settlement of $550m from its insurers for the damage to its buildings arising from the 2010 and 2011 earthquakes. At the time, the settlement was made it was the biggest in New Zealand history.

Vero was the lead insurer of five companies paying out the record claim, involving the assessment of 237 buildings damaged in multiple quakes.

The Lyttelton Port Company received an insurance payout of nearly $440m after it settled a long-running dispute with insurers over earthquake-related claims.

Like the Christchurch City Council, it entered into a mediation process with its insurers – Vero, NZI and QBE – before finally settling in December 2013 for a payment in aggregate by the three insurers of $438.3m plus GST.

The Canterbury District Health Board settled with its insurers in October 2013. It received a $320m payout for the damage sustained to its 200 buildings during the Canterbury quakes.

The Arts Centre settled insurance claims across all its buildings for $163m. The bulk of its claim was with Ansvar New Zealand (now ACS Ltd), which paid out $156m. The final $6.75m was settled with Lumley Insurance in late 2012.

 - Stuff


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