Council reaches post-earthquake insurance settlement

Christchurch City Council and its insurers, LAPP (the Local Authority Protection Programme Disaster Fund) and Civic Assurance’s principal reinsurers, today announced that they have agreed a full and final conditional settlement in relation to damage resulting from the 2010/2011 Canterbury earthquakes.

The settlement of $635m follows complex and challenging negotiations which took several months to complete. They involved not just the Council’s insurer LAPP, but also Civic Assurance and Civic Assurance’s three main reinsurers. It is a global settlement for all of the 1600 or so individual above-ground asset claims and business interruption losses

The agreed amount of $635m is in addition to the $201m paid by LAPP to Christchurch City Council for damage to the Council’s below-ground assets in 2012 and the Settlement with EQC of $59.4 million (after excess was deducted).

Peter Gudsell, the Council's Chief Financial Officer, said the Council was delighted to have reached a conditional settlement. The insurance negotiations have been ongoing for some time, he said.

"The actual settlement will take place in February when the Council is to receive payment in full. Achieving agreement means the Council will not be reliant upon progress payments from the insurer as and when agreed reinstatement work is undertaken. This gives Council far greater flexibility and certainty in terms of what and when assets can be repaired or replaced."

Christchurch Mayor Lianne Dalziel said the insurance settlement was great news for the city going into the Christmas break.

"Knowing our full and final insurance settlement gives us certainty as we begin work on our 2016/17 Annual Plan. It is an enormous relief," she said.

Lianne Dalziel thanked the many advisers, engineers, experts and staff who have worked on the insurance negotiations over the past five years. "It has been an on-going process and 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."

Tim Sole, Chief Executive of Civic Assurance said, “All concerned wanted to see mediation succeed and Civic believe the Council have secured a very good settlement with Civic’s assistance. 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.”

About LAPP

The Local Authority Protection Programme Disaster Fund (LAPP) is a cash accumulation mutual pool. Civic Assurance is the Fund's Administration Manager.

The LAPP Fund was established in 1993, to help its New Zealand local authority members pay their share of infrastructure replacement costs for water, sewage and other essential services damaged by natural disaster. Since 1991, central and local government has shared responsibility for these costs. Beyond a threshold, central government will pay 60% of the restoration costs, leaving local authorities 40%. Of the 78 local authorities in New Zealand, 46 are currently Fund members.

ENDS

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