The Insurance Council is warning Waikato councils they could be under-covered after they agreed to a new deal with reduced cover to save money.
Waikato's mayors this week discussed the deal, which means their councils will collectively save $688,000 this financial year through new, combined insurance arrangements with insurers AON New Zealand.
But the 10-council deal would give them only $300 million in cover, far less than the full replacement cost of the region's major infrastructure.
Insurance Council chief executive Tim Grafton acknowledged that premiums were rising following the Christchurch earthquakes but warned that ratepayers might regret the move.
"The decisions provide relatively small short-term savings when spread across ten councils, while raising the risk of massive costs to the community they serve if they get it wrong. Catastrophic events do happen and Canterbury has taught us that being properly insured is critical to a full recovery," he said.
"Globally the cost of catastrophic events has leapfrogged in recent years. Climate-change issues are with us for the long term and New Zealand is a seismically exposed country. The risks are not diminishing - if at all possible, full insurance should be maintained by business owners and local authorities."
Hamilton Mayor and regional mayoral forum deputy chairwoman Julie Hardaker earlier said the deal, to move from replacement loss to a maximum probable loss, was a way of working together to save ratepayers money.
- © Fairfax NZ News