Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Back up financial support for AMI policyholders

Back up financial support for AMI policyholders

The Government has announced it will provide a back up financial support package for AMI Insurance to give policyholders certainty and to ensure an orderly rebuild of Christchurch in the aftermath of the two earthquakes.

The support package would be called on only as a last resort if AMI's own reserves have been exhausted - unless the Crown believes it is in the public interest to take control sooner, Finance Minister Bill English said today.

"This support package will give AMI the time to seek a market solution to the challenges it faces as a result of the two Canterbury earthquakes," he says.

If the package is called on, it would involve the Government investing up to $500 million of equity in AMI, with the right to take ownership and assume control of the company if it needs to.

Christchurch-based AMI Insurance is New Zealand's second-largest residential insurer with 485,000 policyholders and 1.2 million policies across the country.

In Christchurch alone it has more than 85,000 policyholders with 225,000 policies - or about 35 per cent of the residential insurance market in the city.

"The Government has made it clear that helping to rebuild Christchurch is one of its most important priorities," Mr English says.

"That is what today's announcement is about: providing certainty for AMI's tens of thousands of policyholders in the aftermath of the two earthquakes and ensuring the rebuilding of Christchurch and the insurance claims process proceeds in an orderly manner.

"AMI approached the Government on 9 March, concerned that its reserves and reinsurance might not be sufficient to cover the total value of claims resulting from the Canterbury earthquakes," Mr English says.

"Since then, officials have been working closely with the company to gather information about what are complex issues and to consider the best option for taxpayers and AMI's policyholders.

"It was the Government's judgement that a support package was necessary to give certainty to policyholders that their claims will be covered. This applies to all AMI policyholders - not just those in Christchurch.

"Because of uncertainty around the cost of earthquake damage, it is too early to tell whether AMI will have sufficient resources to cover all of these claims. The full extent of the claims AMI faces will remain unclear for several months.

"Ministers have decided to act now. This provides a financial backstop for policyholders so the rebuilding of Christchurch is not jeopardised by potential solvency or liquidity issues and so confidence is maintained in the insurance sector.

"AMI has confirmed it will seek an alternative commercial arrangement to replace the Government's support facility as soon as possible. The Government's actions give the company time to do that.

"The alternative of doing nothing would likely have been severe, potentially leaving many thousands of AMI policyholders without the insurance cover and financial resources needed to rebuild.

"It would also have led to long delays in processing claims, other claims being only partially met and many of AMI's customers in Christchurch not having insurance cover for future risks.

"With AMI having about 35 per cent of the residential insurance market in Christchurch, a significant proportion of residential repairs and rebuilding in the city will be funded by insurance payments to AMI customers.

"This is an unusual situation requiring a special response.

"In considering options, the Government has been acutely aware of the need to protect the interests of taxpayers, who are already facing significant costs from the Canterbury earthquakes and finance company collapses.

"If Government financial assistance is needed, the Government will take every possible step to minimise the cost to taxpayers," Mr English says.

"Events such as this show the importance of getting the Government's finances back into good shape as soon as possible. The Government remains committed to returning to budget surpluses and this arrangement doesn't alter that commitment."

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Last Sitting Day Of Parliament: Slave Ships Bill To Pass

The House resumed at 9am and MPs agreed to add the third reading of the Fisheries (Foreign Charter Vessels and Other Matters) Amendment Bill to this morning’s business.

The bill requires all foreign owned fishing vessels to fly under a New Zealand flag from May 2016 and obey all New Zealand laws. This includes labour laws...

Last night Opposition MPs accused the Maori Party of blocking the passage of this bill into law in this Parliament, no members of the Maori Party were in the House to answer the accusations though they denied this in a press release. More>>

 

Parliament Today:

Novopayout: Government-Owned Company To Take Over School Payroll

After lengthy negotiations, the Ministry of Education and the existing school payroll provider, Talent2, have settled both on the amounts payable by Talent2 towards the costs of remediating the Novopay service and a new operating model for the school payroll system. More>>

ALSO:

Employment: Labour Will Raise Minimum Wage, Restore Work Rights

A Labour government will raise the minimum wage $2 an hour to $16.25 and restore work rights to ensure the benefits of economic growth are shared fairly by all New Zealanders, Labour Leader David Cunliffe says. More>>

ALSO:

Police: Crewe File Review Released

No new evidence has come to light implicating any specific person as being responsible for the murders of Jeannette and Harvey Crewe... The review identifies there is a distinct possibility that Exhibit 350 (the brass .22 cartridge case) may be fabricated evidence, and that if this is the case, that a member of Police would have been responsible. More>>

ALSO:

Werewolf Issue #49: Gordon Campbell Interviews Laila Harre

For 25 years, Labour and National have been in virtual agreement about the basics of economic policy, and differed mainly on how to go about managing its social consequences. More>>

ALSO:

Greens: Plan To Protect Our Maui’s Dolphins

1. Protect Maui’s from being killed in the sanctuary set up to protect them... 2. Extend fishing protections to the entire Maui’s range... 3. Help protect the livelihoods of affected fishers by supporting them to adopt dolphin-safe fishing methods. More>>

ALSO:

Gordon Campbell: On National’s Electorate Deals

For all the talk yesterday from Prime Minister John Key about National being transparent about its electorate deals in Epsom and Ohariu, that transparency is entirely front-loaded. More>>

ALSO:

Greens: Oil Drilling Face-Off With Labour

The key policy points in the Green Party’s plan to protect our beaches from oil spills are to:
1. Prohibit deep sea oil drilling; 2. Implement compulsory shipping lanes for coastal shipping; 3. Build Maritime New Zealand’s oil spill response capability; and 4. Introduce a stronger legal framework so that when accidents do happen, the New Zealand taxpayer does not have to pay for the clean-up. More>>

ALSO:


Nick Smith v Fish & Game:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news