Council secures insurance cover for 2011-2012 year

The Marlborough District Council has been able to secure full insurance cover at the last minute for its millions of dollars worth of assets by going into a partnership with neighbouring local bodies in Nelson and Tasman.

But District Councillors have been advised that a full review of insurance arrangements is going to be needed in the wake of the Christchurch earthquakes.

The Marlborough District Council has $250M worth of assets above ground (excluding roads) such as buildings, and another $450M below ground, including sewerage and water reticulation networks and river control. While central government meets 60% of the cost of damage to such assets in a natural disaster, local governments are liable for the remaining 40%.

Until yesterday, the Council's insurance coverage for its below ground assets was provided by the New Zealand Local Authority Protection Programme (LAPP) Disaster Fund.

But LAPP partners were recently advised that Christchurch claims were so heavy that LAPP need time to re-build its reserves before it could offer future cover.

Negotiations by the Marlborough District Council secured insurance for its above ground assets such as buildings, and other insurances such as motor vehicles, for the year ahead through a ‘Top of the South’ collective with Nelson City and Tasman District councils, said Councillor Maher.

“Given that Marlborough is considered a high risk area with its proximity to earthquake fault lines, we were fortunate to be able to go to the insurance market as part of a bigger pool and secure this insurance,” he said.

“Unfortunately we must face up to the fact that insurance costs are going to be a very significant cost for the Council in the years ahead but at least we have bought the Council time to conduct a full review of our insurance situation,” he said.