Clutha district councillors want to leave the Local Authority Protection Programme (Lapp), after its premium more than doubled because of the Christchurch quakes.
The premium for the 2011-12 year is $149,000, up from last year's $66,000, half of which was later rebated. The corporate services committee this week recommended the council gives 12 months' notice to terminate its insurance with Lapp and develop a self-insurance policy.
The $40 million fund built up by Lapp since 1993 to cover the local authorities' 40% share of any disaster damage - the Government pays 60% - was exhausted by the earthquakes.
Lapp provides financial cover for water, wastewater and stormwater assets in a natural disaster. It does not cover roads and bridges.
Clutha District Council corporate services manager Alan Dickson told the committee at its meeting on Thursday that Lapp premiums were not going to drop.
"All they're trying to do is replenish their cash reserves very, very quickly."
The recommendation was not a final decision, but would allow the council to assess whether it should remain a part of Lapp, Mr Dickson said.
"It's not set in concrete. We might be better off staying with Lapp, but for our council, it's a lot of money."
The committee unanimously supported the recommendation and it was decided to invite Lapp to speak to the council and outline why it should remain in the programme.
It also asked that a report outlining the options be presented to the council in eight weeks.
The council has a $3 million emergency fund and another $3 million in revolving credit which it can access quickly but has to be repaid.
In Otago, both the CDC and the Waitaki District Council are in Lapp, along with about 60 other local authorities in New Zealand.
Waitaki last month decided to remain with the fund, and has budgeted in its 2011-12 annual plan to increase the premium from $25,000 to $100,000. It also has its own $3.8 million disaster fund.
The Dunedin City Council, the Queenstown Lakes District Council, Central Otago District Council and 17 other local authorities are not members of Lapp.
LAPP FACTS
• Old premium: $66,000 (half was later rebated).
• New premium: $149,058.
• Lapp deductible: $500,000 (claim would have to exceed this amount).
• Asset values under Lapp: $179 million.
• Probable maximum loss in earthquake: $414,319 (1 in 1000-year return period).
• Probable maximum loss in flooding: $1,771,543 (1 in 500-year return period).
• Number of member authorities (as at December 31, 2009): 59.
• Council infrastructure assets value: $179 million.
