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



Wellington.Scoop: Serco – First The Prisons, And Now It Wants To Run The Trains

As the government continues its inquiry into Serco’s discredited administration of Mt Eden prison in Auckland, here in Wellington there’s further scrutiny of the British outsourcing company – because it’s competing to take over the running of our commuter trains. More>>


Gordon Campbell: On The TPP Countdown, And Mary Margaret O’Hara

To date, the Key government has been unwilling to share any information about this TPP deal until it is too late for outraged public opinion to affect the outcome... the disclosure process is likely to consist of a similarly skewed and careful exercise in spin. More>>


Australia Deportations: English Relaxed On Immigration Centre Conditions

Labour's Annette King: “There have been numerous reports from inside these detention centres on just how bad conditions are... If they were being held in any other foreign jail, I imagine Mr English would be somewhat concerned. More>>


Schools: Achievement-Based Funding Would Be A Disaster

The Education Minister’s speech to the PPTA Conference raising the spectre of achievement data driving a new funding system would be disastrous, says NZEI Te Riu Roa. More>>

  • Video Out-Link - PPTA Annual Conference 2015 on Livestream (Q+A dicussion suggests funding would be directed to less successful schools.)

  • ALSO:

    ECE Report:

    Key In NY: Prime Minister Addresses United Nations

    Prime Minister John Key has addressed the United Nations General Assembly in New York, focusing on a call for action in Syria and on other conflicts, reform of the veto process and on the UN’s Sustainable Development Goals. More>>.


    Gordon Campbell: On The Lack Of Accountability Over Philip Smith

    In New Zealand, accountability is an exotic creature rarely glimpsed at ministerial level, or among senior management. The flight to Rio by the paedophile /murderer Philip John Smith/Traynor is no exception. More>>


    More On Corrections

    Get More From Scoop



    Search Scoop  
    Powered by Vodafone
    NZ independent news