Earthquake issues complexity delays insurance

Last updated 18:10 14/11/2013

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Christchurch Earthquake 2011

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The complexity of issues surrounding the Canterbury earthquakes means one of the world's largest re-insurers has only paid out a quarter of what it owes to New Zealand insurers.

Insurance companies take out schemes with re-insurers in order to pay out claims.

Mo Tooker, who is the global treaty manager of re-insurer Gen Re, told the Insurance Council of New Zealand conference that it was a situation not seen anywhere else in the world.

''The complexity of the situation with land issues, with EQC, with multiple events - we don't see this complexity anywhere else in the world right now. So as we try to pay what we owe you in good faith the tail on our own exposures will be many, many years.''

His company, owned by billionaire Warren Buffet's Berkshire Hathaway, had only paid out 26 per cent of claims in the 39 months from the first September quakes.

In contrast, it paid out 100 per cent of Chile's February 2010 quake in two years and 91 per cent of Japan's Tohuku 2011 quake in just under three years.

The Press has revealed that some insurance companies are falling behind targets set for a completion of all work by December 2016.

A leaked report prepared for the Southern Response board and Treasury appeared to back up comments from Canterbury Earthquake Recovery Authority (Cera) boss Roger Sutton that insurance companies needed to pick up the pace.

The report with figures up to September said Southern Response expected to do $1.7 billion of work but remains unconvinced it could complete it all by December 2016 as forecast.

However, Insurance Council spokesman Samson Samasoni said collectively insurance companies were not falling behind targets.

The Cera survey and insurer projections were based on information insurers knew at the time but revelations such as last week's Port Hills slope stability report from the city council would undoubtedly have an impact on the programme, he said.

''The people of Christchurch and insurers don't want any further surprises or delays, we all need a framework of certainty and Cera has a key role in helping to achieve that,'' Samasoni said.

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- The Press

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