Wednesday 24 February 2016

In the bank - earthquake insurance pay-out good news for ratepayers

Christchurch City Council has received full and final net payment of $603 million from its insurers for damage resulting from the 2010/2011 Canterbury earthquakes.

The full and final insurance settlement was $635 million, before deductions for the excess and payments to third parties. The pay-out is about $80 million higher than budgeted for by the Council.

Peter Gudsell, the Council's Chief Financial Officer, says the Council will now not have to borrow as much for rebuild and repair work. As a result the amount required to service debt will be less than initially anticipated.

The $603 million cash pay-out is on top of the $201 million paid in 2012 by the Local Authority Protection Programme Disaster Fund for damage to below-ground assets, and the settlement with the Earthquake Commission for earthquake damage of $59.4 million. All three payments are net, after taking off items such as insurance excesses and payments to third parties.

The Council has therefore received about $863.4 million in total from all three pay-outs. Last week's payment settled more than 1600 individual claims lodged by the Council.

Mr Gudsell says the insurance pay-out could not come at a better time for the Council, as it prepares its draft Annual Plan for 2016/17 to be considered by the Council on 21 March.

"There's no greater certainty than having the money in the bank. Given that the Council has given the organisation a very clear mandate to prepare a draft budget that reduces the level of rate increases, settling our insurance claim allows us to plan with confidence," Mr Gudsell says.

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