DCC seeking better deal on insurance

Grant McKenzie.
Grant McKenzie.
A Dunedin City Council senior manager has flown to London for meetings aimed at securing better insurance cover for $3.4 billion worth of ratepayers' assets.

Grant McKenzie, the council's group chief financial manager, flew to England on Saturday for a ''pretty intense'' series of meetings spread over three days, council chief executive Dr Sue Bidrose said yesterday.

The trip aimed to improve existing insurance arrangements for the council and its companies, which together had assets worth $3.4 billion.

About $1.6 billion of those assets remained without insurance cover following the Canterbury earthquakes, after international reinsurers refused to cover underground assets and the council refused to pay inflated premiums for above-ground assets.

The council instead relied on self-insurance, funded to date by $250,000 in premiums savings in 2011 and pre-approved access to a $200 million loan, if needed.

In an emergency, the funds would cover the council's 40% share of any repair bill required to obtain 60% support from the Government.

Dr Bidrose would not say who Mr McKenzie was meeting during his trip, but he had been appointed late last year in part because of his prior experience dealing with ''major insurers in London''.

Mr McKenzie, a chartered accountant, was also a former Allied Press group accountant, University of Otago director of financial services and company director.

He had spent the first few months of his new role studying existing insurance arrangements across the council and its companies, Dr Bidrose said.

That included what was and was not insured and what the council's excesses and risks were, which would all be up for discussion in London, Dr Bidrose said.

''He's looking for improvements in any, or all of those areas, whether it be excess, whether it be extent of cover, whether it be type of cover - he's just looking to see what the opportunities are for a better deal for the city in anywhere that he can find it, basically.

''He has gone over with an open mind as to how we could improve the overall state of the insurance coverage for Dunedin City Council and its entities.''

Insurance was an ''ongoing problem'' for councils across New Zealand, including the DCC, in the wake of the Canterbury earthquakes, Dr Bidrose said.

Council finance committee chairman Cr Richard Thomson said it was hoped Mr McKenzie's trip could secure a better price but also better ''value for money'' for council insurance.

''At the moment there's quite a bit of city infrastructure that we can no longer insure.

''If we were to have a major earthquake now, we would have a significant exposure to risk that we just can't insure against in the New Zealand market.

''It may not even necessarily be cheaper insurance, but if it covers a greater proportion of the risk then that would be a benefit as well,'' Cr Thomson said.

Dunedin Mayor Dave Cull said Mr McKenzie had ''some considerable expertise in this field'' and the face-to-face meetings were ''a very cost-effective strategy''.

''He's seeking to get much better deals than you can get here. My understanding is that if you don't turn up, they're not interested in email.''

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