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

TV3 Videos: Key's Flip-Flop Over Whale Oil Texts | Slater
Reaction: Greens | More
Dim-Post Link: The Very Odd Slightly Left Of Centre

Gordon Campbell: On Government Arrogance

Right now, National is ramming anti-terrorism measures through Parliament. This legislation will grant the SIS the power to carry out 48 hour bouts of surveillance on anyone without a warrant, and will bestow on government the power to unilaterally revoke anyone’s passports and thus deny them the freedom to travel.

Ludicrously, the public has been given exactly one day to make submissions on these major infringements of their civil liberties. Despite Finlayson’s misleading signals on RNZ that these are only stopgaps until next year’s full review of our security laws, the measures in question will not, in fact, expire until 2018.

Why the insane rush? Good question. More>>

 
 

Parliament Today:

Key Texts With Whale Oil Released: PM Can’t Be Trusted Over Dirty Politics Defence - Greens

John Key’s answers to questions about dirty politics can’t be trusted, after he was forced to admit that he had misled journalists and Parliament about contact with attack blogger Cameron Slater, said the Green Party today.. More>>

ALSO:

Temporary Release Crackdown Continues: Corrections Review Of Phillip Smith Case

“The review by Corrections’ Chief Custodial Officer reveals that the plan for Smith’s series of temporary releases was overly ambitious and misinformed. He’s a highly manipulative and deceptive person who although technically eligible, should not have been considered for temporary release." More>>

ALSO:

White Ribbon Day: Govt Resumes Sexual Violence Trial Proceedings Work

Justice Minister Amy Adams has asked the Law Commission to resume work on proposals for better supporting victims of sexual violence through the criminal process. The Law Commission will revisit its previous work on alternative pre-trial and trial processes to identify options for improving complainants’ experience in court. More>>

ALSO:

"New Faces, Wise Heads": Andrew Little Announces New Labour Line Up

Labour Leader Andrew Little today announced a bold new caucus line up which brings forward new talent and draws on the party’s depth of experience. More>>

ALSO:

Gordon Campbell: On Rick Ellis As Te Papa’s New CEO

The recent appointment of former TVNZ boss Rick Ellis to head Te Papa has copped a fair bit of criticism. Much of it has been inspired by the suspicion that Ellis has been hired to pursue the same purely commercial goals as he did at TVNZ, while similarly neglecting the serious cultural side of his mandate. More>>

Passport Cancellation, Surveillance: Draft 'Foreign Fighters Legislation' Released

The final draft of the Countering Terrorist Fighters Legislation Bill contains proposals previously announced by Mr Key in a major national security speech earlier this month. More>>

ALSO:

Related

Joint Statement: Establishment Of NZ-China Strategic Partnership

At the invitation of Governor-General Lt Gen The Rt Hon Sir Jerry Mateparae and Prime Minister The Rt Hon John Key of New Zealand, President Xi Jinping of the People’s Republic of China made a state visit to New Zealand from 19 to 21 November 2014... More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news