Media Release
10 April 2014

Hawke’s Bay Disaster Damage Policy Reviewed

Hawke’s Bay Regional Council has reviewed its Disaster Damage Risk Management Policy.

This policy covers the provisions HBRC has in place for the financial risk when Council owned/administered flood control and drainage schemes plus open space areas are impacted by a disaster. HBRC’s infrastructure assets have an estimated replacement value in excess of $190M.

Central government requires local authorities to have undertaken proper planning for risk to infrastructure assets. The objective is for every local authority to have access to sufficient funds (both money held in reserve and insurance) to sufficiently reinstate essential infrastructure assets so that communities can return to self sufficiency as quickly as possible after a major disaster.

The Regional Council last reviewed the policy in 2007. The Environment and Services Committee considered the reviewed policy this week and is making recommendations to the full Council meeting at the end of the month.

The Committee has recommended that HBRC will continue to hold insurance for damage to any Council-owned fixed asset, e.g. pump stations, for the full cost of repair in excess of $10,000 of reinstatement of the asset.

HBRC will also continue to transfer some financial risk through maintaining its membership of the Local Authority Protection Programme (LAPP). This is a risk sharing mutual scheme with 46 member councils, and is operated as a charitable Trust rather than as an insurance company. LAPP is intended to help member councils meet their share of the costs, above a specified threshold, of restoring flood control and drainage infrastructure after a natural disaster. The deductable (excess) on any insurance and LAPP policy is $1.259 Million.

Although the LAPP fund was exhausted by claims following the Canterbury earthquakes in the 2010/11 financial year, it has been rebuilding since then. At the end of the 2013/14 financial year it is expected to hold in excess of $12M, provided it has no major claims made against it. It holds reinsurance to cover damage up to $250M.

HBRC manages 25 separate flood control and drainage schemes. Each of these schemes will have access to a Scheme disaster reserve fund.

A regional disaster reserve will continue to be maintained to cover additional financial exposure of HBRC. Total disaster reserve funds currently held by HBRC total approx $6.5M.

ENDS

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