Christchurch City Council is going to look into new ways of insuring the city’s assets.
The Council’s Finance and Performance Committee of the Whole has asked the Council’s Executive Leadership Team to explore alternatives to traditional insurance coverage.
Currently Christchurch has about $3.5 billion of above ground assets. For these assets, the city buys about $2 billion of insurance cover.
Christchurch’s below ground assets, such as water supply, waste water and storm water pipes, are valued at around $8.2 billion.
The Council has only been able to secure about $500 million insurance cover for its below ground asset.
However, in the event of a disaster the Crown would contribute up to 60 per cent of eligible costs of repairing or replacing the below grounds assets under the National Civil Defence Emergency Management (CDEM) Plan cost sharing arrangement.
Finance and Performance Committee Chair Councillor Raf Manji says with the Crown considering changing the 60/40 cost sharing arrangement, it would be preferable for the Council to have more insurance cover.
The challenge though is that below ground insurance is both expensive and difficult to purchase.
In a report prepared for the Committee, Cr Manji says it is time for the Council to start looking at alternative forms of risk transfer, rather than relying solely on the traditional insurance market.
Recently Cr Manji, Mayor Lianne Dalziel, and Chief Resilience Officer Mike Gillooly attended a series of meetings in London with insurance experts to discuss how Christchurch could shift to a more risk-based approach to insuring the city’s assets.
“The meetings reinforced our understanding that governments and large corporates are increasingly looking at alternative sources of capital to manage complex risks, not always covered by traditional insurance,’’ Cr Manji says.
“Today the Committee has asked the Council’s Executive Leadership Team to develop a broader risk and resilience framework for asset management as part of the 2021 Long Term Plan. It has also asked it to explore alternatives to traditional insurance.
"We will continue to use traditional insurance but possibly in combination with other risk management options,'' Cr Manji says.