AMI yet to confirm fresh reinsurance as June 30 deadline looms for expiry of current cover

AMI yet to confirm fresh reinsurance as June 30 deadline looms for expiry of current cover

By Hannah Lynch

AMI, Christchurch's largest residential insurer, is dismissing concerns it could be uninsured as soon as Friday as officials scramble to put reinsurance in place in the event of a fourth quake.

AMI CEO John Balmforth restated on Tuesday the company's position that it was confident that reinsurance would be in place before Friday but said the company would not publicly comment on the situation until next Monday.  A company spokesman later said an announcement could come as soon as Thursday afternoon.

“There are some contractual issues that still need to be signed,” he said. 

Balmforth downplayed concerns about policy holders being at risk in the event of another quake after Friday.

Although, Balmforth conceded a deal had not been finalised, he said one was “almost complete.”

“The situation with our reinsurance is that the programme placement has progressed well. Two components of the programme are already in place and the third component is progressing exceedingly well and we are confident that we will be finished by the deadline date of the 30th June.” 

The urgency of obtaining reinsurance has become clearer since Civic Assurance revealed yesterday it could not get reinsurance. AMI is the insurer most exposed to further Christchurch quakes. If it does not find reinsurance by Friday any new quake damage would have to be paid for out of the government's credit line behind AMI.

In a June 8 press release, AMI chairman Kerry Nolan said the company was in good shape and would have "finalised comprehensive and affordable reinsurance cover for its normal business and for any future catastrophes" come July 1.

Balmforth, who has recently travelled to Sydney, Bermuda, continental Europe and Britain to put in place a reinsurance programme, said in AMI's June 8 release, that reinsurers were not deterred by the earthquake situation in Canterbury. 

"Reinsurance companies have had to face a number of catastrophes around the world in the last year, with major damage arising from floods, tsunamis, earthquakes, tornadoes and other natural disasters.  However, they continue to assess risks and to price their cover accordingly - that is the business they are in. For New Zealand this means higher reinsurance costs affecting the whole insurance industry and making higher premiums for policy holders inevitable. The good news for AMI policyholders is that they will continue to have reliable insurance cover, backed by sound international reinsurance."

The company has not made any public statements until today about its reinsurance since the most recent earthquake in Christchurch on June 13. The magnitude 6.3 caused more destruction and opened up new claims for insurers.

Rating agency A.M. Best has given AMI an "excellent, A-" credit rating based on assurances of a Government bail-out.  See details of original bail-out offer from Government to AMI here. Also read Bernard Hickey's opinion piece on why the insurance sector needs tougher regulation.

The Government has also pledged financial support for Christchurch City Council and Waimakariri District Council as their local government insurer has refused to renew with them.  (See June 27th article by Hannah Lynch).

Additionally, the Government has also pledged NZ$1.5 billion to bailout the worst affected home owners in Christchurch. 

*(Updates with comments from AMI CEO John Balmforth, spokesman on Thursday announcement) 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

8 Comments

Sign me up for another bailout.

Not that I have much say in the matter.

But at least we can vote out John Key, borrower and bailer-out extra-ordinaire.

cr*p (TM)....

regards

And who heads a government once you vote JK out?  The only alternative is a Labour-led government, are you saying they wouldn't be a bail-out and borrower government??

Seriously, a Labour-led coaltion of Greens (most government interventionist party of all), plus likes of Mana Harawira Party, could make JK look like a fiscal arch-conservative

That must the worst defence of National, saying Labour would borrow more.

First of all, Labour hasn't. Michael Cullen was the fiscal arch-conservative compared to John Key.

Secondly, you're forgetting about Don Brash.

If the polling is any indication everyone else is forgetting DB as well.

 

regards

This big game of Russian Roulette with Mother Nature just keeps getting a bit one sided now . Now  the council can't get reinsurance, residents may struggle to get insurance, no promises that we won't get any more big aftershocks or ANOTHER fault line is discovered. it's like there are two bullets in the chamber now ......

I have just phoned AMI, they tell me they have secured double the re-insurance cover from 1st July....

Apparently CEO John Balmforth, has made public statements to that effect and is the person to talk to and not AMI chairman Kerry Nolan....

regards

I just reinsured my wifes car (with AMI).

Your access to our unique content is free - always has been. But ad revenues are under pressure so we need your direct support.

Become a supporter

Thanks, I'm already a supporter.