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Earthquake Recovery Minister Gerry Brownlee has accused the Insurance Council of "scaremongering" after claims that New Zealanders will no longer be able to get full insurance for quakes.
At a press conference this morning, Brownlee challenged private insurers to front up and tell New Zealanders if they intended to drop or limit cover for natural disasters.
"Until you have individual insurers stepping up and saying they no longer want to be in our market, I don't believe the Insurance Council's position is credible," he said.
After speaking to global reinsurers in Europe, he was confident insurers would soon start writing new policies in Christchurch.
Reinsurers were in the risk business and he expected they would continue to offer natural-disaster cover in New Zealand.
"I think it's very important we don't overhype this and put out a scaremongering sort of situation," he said.
The Insurance Council warned yesterday that New Zealand faced the prospect of limited or no natural-disaster cover within a year as global reinsurers shied away from the country after the Canterbury earthquakes.
Council chief executive Chris Ryan said New Zealand needed to be prepared to join the likes of Japan and California, where natural-disaster insurance was limited and expensive.
He said New Zealand private insurers and the Earthquake Commission had all secured reinsurance for the next 12-24 months, and insurers should start writing new policies in Canterbury soon, provided there were no large aftershocks.
But next time around, reinsurers would be reluctant to provide natural disaster cover in a country that represented only 0.2 per cent of the global market, had generated huge insurance losses and had a well-known seismic risk.
"While it is a fact that all the major insurers in New Zealand currently have reinsurance cover for at least the next 12 months, beyond this, 100 per cent reinsurance cover is not a guaranteed feature of the insurance landscape in this country," he said. New Zealanders had benefited from "very reasonably" priced insurance cover for the past 50 years, but this would change.
Insurance cover has become an increasingly urgent concern in Canterbury, with some community and business leaders saying a lack of new cover has stymied the quake recovery.
Most banks are reluctant to lend without insurance, and some Canterbury builders have reported difficulty securing contract cover to construct new homes and buildings.
The Government has acknowledged the lack of insurance in Canterbury is a problem, and Earthquake Recovery Minister Gerry Brownlee this month met global reinsurers in Europe in an attempt to "de-risk" New Zealand.
However, global reinsurers have not said when they will be prepared to write new policies in Canterbury and New Zealanders are already being hit with sizeable increases in premiums.
Ryan said a wide-ranging review of disaster cover would be needed, including the Government exploring taking on more of the risk assumed by private insurers.
Banks would also have to become more flexible about lending to customers without full insurance, he said.
"At some point very soon we are going to have to have a really detailed debate about the future of earthquake cover in this country," Ryan said.
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