From: David Lynch , Momentus Public Relations

To: Gerry Brownlee, David Carter, Kate Wilkinson, Nicky Wagner, Amy Adams, Ruth Dyson, Lianne Dalziel, Clayton Cosgrove, Megan Woods, Eugenie Sage, Kennedy Graham, Mojo Mather and Dennis O'Rourke

Canterbury MP’s briefing: Concerns regarding Christchurch City Council's insurance position - 12 April 2012

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Since April 2011, I have raised various Christchurch City Council's insurance concerns with Paul Anderson, General Manager Corporate Services Christchurch City Council on behalf of a number of clients. Despite Mr Anderson’s reassurance in October 2011 rejecting any suggestion of a “potential $500 million insurance shortfall, the Council has now confirmed (Press 5/04/2012) a $400 million insurance shortfall.

As so far as our clients are concerned, this shortfall will have significant ramifications for the commercial rates set by the Council, which in turn will impact on our clients development and on-going building costs to such a degree that they may consider it economically unviable to rebuild and/or remain in Christchurch.

Our clients believe there are significant unanswered questions concerning the discrepancies between the statements made by Paul Anderson to Momentus Public Relations last year (see below), when compared with his most recent statement now confirming a $400 million insurance shortfall, a fact which he had previously rejected.

In their opinion, the announcement confirming the $400 million shortfall is a significant change from what Mr Anderson had previously stated. Our clients seriously question how they can cost and plan future buildings in the CBD with any degree of certainty relying on the Council financial projections. Simply put, they do not trust or have any confidence in what the Council is telling them.

In response to these and other concerns, our clients join those calling for an independent review of the Councils insurance position and risk assessment. They also would like to know why the Councils Audit and Risk Management Subcommittee has apparently not considered it necessary to undertake any such review concerning these insurance matters.

Our clients have requested that we bring this matter to your attention. They would welcome any feedback you may wish to provide. Furthermore, they have asked us to advise the media that they have communicated their concerns to you.

Regards

David Lynch

Momentus Public Relations Ltd

ENDS

Sent: Tuesday, 10 April 2012 5:24 p.m.
Subject: Christchurch City Council Insurance Matters

Paul Anderson - General Manager Corporate Services Christchurch City Council

Copy Mayor Bob Parker & Councillors

Paul

You will recall my communications with you last year, requesting clarification of various Council earthquake-related concerns. A number of our clients had asked us to bring these concerns to your attention.

Firstly, on 11 April 2011, I requested your reassurance that a Council statement, released following the February 2011 earthquake, was an accurate representation of the Council's position, in stating,

“The costs of repairing Council infrastructure was well covered by comprehensive insurance and wouldn't impact on rates”.

In your response, 12/04/2011 - you stated: “The Council holds insurance for the permanent replacement of its infrastructure assets through Civic Assurance and the Local Authority Protection Programme (LAPP).”

On 27 September 2011, I sought your further response to concerns raised by a member of the Chamber of Commerce, regarding the Council's facing a “potential $500 million insurance short fall for permanent replacement of its infrastructure assets”.

In your response, 19/10/2011 – you stated, that this was not correct, and that the "Council’s above-ground assets are insured with Civic Assurance, which has adequate reinsurance to cover the estimated damage to these assets of $363 million.”

However, despite these past reassurances, unless our clients have misunderstood, from careful reading of your statement in the Press article 5/04/2012, there does appear to be a $400 million insurance shortfall!

I am, therefore, seeking your response to this apparent discrepancy, given the Council’s original assurance regarding “comprehensive insurance” that “wouldn't impact on rates”.

Further, I would also appreciate you responding to the following questions:

1. What were the key reasons for your decision to approve the move from NZI to Civic Assurance?

2. Where were the Council savings made from being insured with Civic Assurance instead of NZI diverted to?

3. What previously budgeted sum was involved and how is it subsequently accounted for and over what period of time?

4. What measures are you taking to seek redress with Civic Assurance for the stated shortfall in the insurance cover, which you have publically indicated is an issues with them?

5. Has the Audit and Risk Management Subcommittee carried out a review following Tony Marryatt admitting (Press 10/11/2011) that staff went beyond their authority in signing an insurance deal to keep him "out of the loop" and if so, what was the outcome?

6. When did the Audit and Risk Management Subcommittee first meet to discuss the Council’s insurance shortfall?

7. When did the Audit and Risk Management Subcommittee first meet to discuss the reinsurance issues for underground assets?

Regards

David Lynch

Momentus Public Relations Ltd

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http://www.stuff.co.nz/the-press/news/christchurch-earthquake-2011/6696504/Rates-hike-means-new-facilities-world-class

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