Churches ponder options after insurer withdraws

CHRISTCHURCH — A major insurer of Church buildings will not write any new insurance cover against earthquakes in New Zealand from December — and the implications for New Zealand Catholic dioceses are mixed.
In late September, Ansvar New Zealand announced it would stop writing new insurance cover for earthquakes and would renew present cover only until December 1.
This came after credit rating agency AM Best downgraded both the financial strength and issuer credit ratings of Ansvar NZ on September 28.
Ansvar NZ’s United Kingdom-based parent Ecclesiastical Group announced gross claims from Christchurch’s earthquakes since September, 2010, were about $700 million. These included some non-church claims, such as for damage to the Christchurch Arts Centre. Since the first earthquake, Ansvar had collected $35 million in premiums.
The company reportedly provides earthquake cover for some 600 churches in New Zealand, across several denominations, including Catholic churches in Christchurch and Dunedin dioceses.
Christchurch diocese financial administrator Paddy Beban said the diocese will be discussing its options with brokers, “but in today’s environment, it would be unrealistic to anticipate another insurance provider will be waiting to cover diocesan assets”.
Mr Beban believes Christchurch diocese will face big increases in premiums and changes in policy conditions.
He could not rule out rationalising, selling or demolishing churches because of unaffordable insurance cover, but it was too early to say much else.
The Otago Daily Times reported Dunedin diocese manager Stuart Young saying that the Ansvar withdrawal could be managed and would be a short-term blip in the insurance market.
Auckland diocese general manager Kerry Coleman told NZ Catholic that insurance advisers predict premiums will go up when the diocese’s insurance is renewed from January.
“[But] we are going into the marketplace very shortly and we expect a reasonably competitive environment,” Mr Coleman said.
Auckland and Palmerston North dioceses, Wellington archdiocese, and the Wellington-based Catholic Schools Board Ltd all belong to the Catholic Church Underwriting Agency.
This body collectively engages insurance managers Fraser Macandrew Ryan to go into the market and get the best possible deals, Mr Coleman said.
Cover is often diversified with several different insurers, he added.
Fraser Macandrew Ryan chief executive Paul Meehan told NZ Catholic that despite the Christchurch events, there is still competition in the New Zealand insurance market for the Church’s business.
“There is no reason why the Catholic Church’s business would not be competed for keenly by remaining insurers,” Mr Meehan said.
But Church clients will be looking at insurer security, coverage conditions on offer and the price of that coverage, he said.
Even Ansvar could potentially offer earthquake cover in future through an underwriting agency in New Zealand as a subsidiary of its Australian business, Mr Meehan said.
“What they can offer there will largely depend on the extent of the reinsurance cover they can purchase.”
Mr Meehan said the industry is seeing significant increases in property insurance premiums in general, although these would be more “at the commercial and corporate end”, rather than at the residential level.

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Michael Otto

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