More than $1 billion of previously uninsured Dunedin City
Council assets are now covered in the event of a major
disaster, although questions remain over some details of the
new deal, council staff say.
Councillors at yesterday's finance committee meeting heard
the details from council group chief financial officer Grant
McKenzie, who earlier this year travelled to London in search
of improved cover.
That came after the council was left with $2.3 billion of
uninsured above and below-ground infrastructure assets after
the Canterbury earthquakes.
The new deal meant cover was extended to include uninsured
pipes and other underground assets, with the ''first loss''
cover limited to $100 million and a $2 million excess on
In a disaster, that would allow the council to cover 40% of
any damage bill, which was required to obtain the other 60%
from central government, effectively turning $100 million
into $250 million of cover, he said.
That still left roads and other above-ground infrastructure
assets worth $915 million without cover, although, in an
emergency, the New Zealand Transport Agency would pay ''a
large share'' for some work, he said.
And, despite the improved cover, the total cost of council
insurance would rise only slightly, from $2.18 million in
2013-14 to $2.25 million for 2014-15, Mr McKenzie's report
The council also had access to other arrangements, including
a $250,000 self-insurance fund and a pre-approved $200
million loan, if needed, he said.
Mr McKenzie said the deal was ''a lot better than it ever was
in the past'', and at yesterday's meeting he praised the
''team effort'' by council staff for delivering the good
However, there was still ''room for us to improve'',
including reconsidering the amount of first loss cover - or
maximum foreseeable loss - the council might need in future,
The amount had been increased from $220 million to $250
million for the coming financial year, but might need to rise
again to cover an event like a multi-building fire in the
Octagon, for example, he said.
''It's whether that number is high enough,'' he said.
''If there was an event in the Octagon, you've got the Civic
Centre, library, Municipal Chambers, art gallery, all within
Cr David Benson-Pope, speaking at yesterday's meeting, said
the DCC was not the only council facing a similar insurance
problem, and he wondered what Local Government New Zealand
(LGNZ) was doing.
Mr McKenzie said he was a member of a LGNZ working party
formed to address the issue, and a report containing options
would be considered by the LGNZ executive in due course.
Councillors voted to accept Mr McKenzie's report.