The Insurance Council of New Zealand has said that the recent decision to settle with Christchurch’s Quake Outcasts “raises concerns that people may not insure their properties.”
Earlier this week, the Crown said that it would settle with uninsured property owners after a six year legal battle and
Tim Grafton,
ICNZ chief executive, believes the decision could impact insurance buying habits.
“While it is positive that the offer was for less than 100% of the property value to acknowledge the lack of insurance, there is still a moral hazard for the Crown because increased levels of government support in place of insurance will provide a greater incentive for people not to insure their property,” Grafton said.
With the
EQC designed to provide protection for property owners with insurance through its levy, which has been backed by successive Governments, Grafton said the Crown’s decision on Quake Outcasts “makes no sense.”
“It simply isn’t fair on all those that take out insurance,” Grafton continued.
He added that clarity and certainty is needed on how the Government treats those that are uninsured going forward as the EQC scheme should not be undermined.
“Specific legislation is required and the current review of New Zealand’s natural disaster insurance scheme in the Earthquake Commission Act provides that opportunity,” he said.
Earlier this week, the Cabinet agreed to pay each of the 16 Outcast homeowners 80% of the rateable value of their uninsured property improvements and a payment to account for the court’s decision, extra uncertainties and costs.
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