Grant Thornton, the liquidator for failed Queenstown based insurer Western Pacific Insurance, has written to policy holders telling them their policies have been cancelled under New Zealand law because its investigations found the policies were not covered.
The announcement leaves 7.000 customers in the lurch, many of whom thought they were covered for damage in the Christchurch earthquake. See more background here in Amanda Morrall's exclusive on the Australian insurer blacklisted in Australia who set up Western Pacific.
“Under Section 269 of the Companies Act 1993, we disclaim the insurance policies as onerous property, the effect of which is the cancellation of all policies immediately,” David Ruscoe and Simon Thorn from Grant Thornton said in a statement.
"Since their appointment, the liquidators have been assessing the business and reviewing and checking all client insurance policies in respect of which premiums have been paid, are registered with the company and are valid," they said.
“Our priority is to ensure that reinsurance with offshore companies can be collected. Once we confirm this amount, we will be in a better position to progress the individual claims,” they said.
The liquidators said they had entered into a preferred supplier agreement with Tower Insurance. They aimed to report again to policy holders by May 31.
Western Pacific was set up in 2005 before the insurance sector was regulated. It is now being regulated by the Reserve Bank, replacing the current self-monitored regime.