"Highlighting the inadequacies of the way in which the earthquakes of 2010-2012 were handled by the insurance industry! "

Can the New Zealand insurance industry cope?…

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The Plight of Ansvar Insurance and Western Pacific Insurance after the Canterbury Earthquakes.

“Another Year”. Courtesy of Micah Richardson

This is what happens when capital adequacy requirements are not stringent enough- insurers fail!  Ansvar Insurance specialized in insuring churches, education and heritage buildings. You will notice that there are churches coming up for sale all over the country presently, as insurance becomes too costly or simply unavailable.  Ansvar withdrew from New Zealand completely after the Canterbury earthquakes, stating that it had NZD 700 million in claims and only NZD 35 million in premiums and unable to find affordable reinsurance. Existing policies were cancelled on 31 Dec, 2011 leaving customers without insurance. Ansvar had 2100 commercial customers and 8900 domestic customers. (See reached a deal with Bridges Insurance Services which is underwritten by Lumley Insurance to take on some of its customers and its direct customers were supposedly able to get interim insurance with Ansvar Australia. (See Christchurch/6200802/Hundreds-face-insurance-doubt-as-provider-quits).

The Government has/had no plans to help Ansvar Insurance customers caught short by their provider’s exit from the New Zealand market. Ansvar withdrew as it was unable to find affordable reinsurance after being swamped by NZD 700 million in earthquake-related claims. Community Law Canterbury, managing solicitor, Kevin Campbell, said newly uninsured properties, badly damaged or written off by earthquakes, could be in a legal quandary.

If the Government’s going to assist in one area, why not in another? It’s not as though these people have chosen not to insure. [Insurers] would have to honour the damage sustained and the cost of repair up until the time of termination, no question. But it could become messy if a house was subsequently damaged so that it renders it impossible or impractical for repairs to occur, he said. (See

Many customers thought that Ansvar would arrange for continued insurance elsewhere for clients, however, customers were left to find solutions themselves. Even though such home owners’ policies were expiring, Hon. Gerry Brownlee stated that the Government had no intention of intervening. One Canterbury resident said,

We too are in the same boat, but unfortunately got our letter too late and it is now even too late to be covered by the Australian branch…. None of the insurance companies want to know us and so we are left completely unprotected with no house or contents insurance… What are we supposed to do? It was supposed to be a nice Christmas [2011] after a hell of a year, well Ansvar has put an end to all happiness in our household – we are nothing but stressed, worried, and devastated. Is all our hard work and loyalty for nothing? Ansvar have been gutless in their dealings with us, could they at least not have left it until January?…, could they not have made the default option that we are covered under Australia? If anyone has any ideas about how we can access some insurance we would be so happy to hear how we might be able to get out of this dire situation…. (See “Haven’t been through enough”,  03:21 pm Dec 22 2011, Ansvar

Unsurprisingly Ansvar has somewhat cynically recently changed its name to ACS (NZ) Limited. Ansvar states, This follows our decision to wind down our business in New Zealand, and no longer offer insurance here. However, we continue to provide a New Zealand based claims service for the management of any outstanding claims. (1 February, 2012). For the lastest on Ansvar and the Canterbury Earthquakes see

Western Pacific Insurance Limited  collapsed in April 2011 unable to meet its obligations as a result of the Canterbury earthquakes. While the company did have reinsurance, it could not meet the NZD 1 million excess on each of the reinsurance policies covering 2010 and 2011.  After a court case, 183 residential and commercial property owners shared part of NZD 33 million in reinsurance money owed to the failed Queenstown insurer.

At the time Western Pacific Insurance Limited was placed into liquidation, it had NZD 60 million of unsettled claims (both earthquake and non-earthquake related). Western Pacific had reinsurance treaties which were triggered by some of the claims resulting from the Canterbury earthquakes. The liquidators say that those treaties cover NZD  33 million of the claims which have been made. The liquidators of Western Pacific[1] applied to the High Court for a declaration that the reinsurance proceeds should be available to all policy claimants and creditors, to be distributed in the usual pro-rata way between all creditors (including policyholders). The policyholders whose property was damaged in the September and February quakes sought a declaration that section 9 [of the Law Reform Act 1936] applied to the proceeds of reinsurance, and that they therefore have a statutory charge over the money. In this landmark case, and in line with Australian legislation which deals expressly with reinsurance payments, the High Court found that section 9 does extend to the proceeds of reinsurance treaties. On the essential issue, the Court accepted that the reinsurance was for the purpose of indemnifying Western Pacific in respect of Western Pacific’s liability “to pay damages or compensation”. (See

Section 9 therefore creates a statutory charge over the reinsurance moneys which are payable to the reinsured. In Western Pacific’s case, the statutory charge is enforceable by the Canterbury policyholders.

In a seismic nation like New Zealand we cannot afford to have insurers without adequate capital supporting their operations – otherwise people who have paid premiums in good faith find themselves in situations they would never have contemplated. Do our national insurance capital adequacy requirements go far enough? – I think that the evidence suggests NOT!

~Future Proofing for a sustainable, participatory, democratic society.

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Author: Sarah-Alice Miles

Love to write, create and watch the clouds move across the sky - these days in the Netherlands. 'Art allows us to find ourselves and lose ourselves at the same time'.

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