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Tuesday, March 8, 2011

Insurers halt new policies after Christchurch earthquake

Insurers halt new policies after Christchurch earthquake

Last updated 05:00 09/03/2011
Large insurers have stopped accepting new house insurance business in Canterbury. The decision will slow property sales for at least two months.

AMI is continuing to insure existing customers but will not take on new ones for house, contents or vehicle cover.

AMI chief executive John Balmforth said the insurer had put a halt on new earthquake insurance policies.

"We did suspend all underwriting in South Canterbury, Canterbury and the West Coast from February 22," Balmforth said.

However, if a house was currently insured with AMI, the company would continue to insure it on the same basis, whether the purchaser was an AMI customer or not.

It was not offering new insurance policies on houses not already insured by AMI because that would increase the company's risk exposure.

AMI has the largest share of Canterbury's general insurance market.

Balmforth said it would continue to insure existing customers for contents who were moving, but would not take on new customers.

Similarly, with car insurance, it would provide cover to only existing customers buying replacement or additional cars.

AMI was reviewing its South Canterbury restrictions, Balmforth said.

It was the same approach after the September 4 earthquake, which had been relaxed case by case.

Balmforth said last month's quake had raised questions over land and had put a "completely different context" on things.

He said it was likely to take a lot longer for the firm to return to normal underwriting practices.

IAG New Zealand chief executive Jacki Johnson said the company had put a halt on new insurance cover in Christchurch and some parts of the South Island until March 31. That was standard industry practice after a major disaster, and was in place for a 21-day period after the September 4 quake, Johnson said.

Australian-owned IAG has the State, NZI and Lantern brands in New Zealand.

Gill Newman, owner of the Hillyer's bakeries in Canterbury, is angry she cannot get insurance for a home she wants to buy.

Newman said her own home would go unconditional today, but she did not know whether the buyers had been able to secure insurance.

FMR Risk, which deals with the major insurers, had told her they could not place any new insurance in Canterbury.

"I don't want to have a house that's worth a fortune without having any insurance," Newman said.

"I just think it's very sad when we have the opportunity to stay here and help rebuild the city and then you come up against this. It's too tough."

Lumley chief executive John Lyon said the company was not writing new earthquake business in the Canterbury region.

"Once we have had the opportunity to assess the situation further, we will review this position."

- The Press

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