The insurance crisis facing all New Zealand churches in the wake of the Christchurch quakes today became more stark.
Ansvar, the company which has insured 75 percent of Kiwi churches, today announced that it intends to get out of New Zealand completely, and that Ansvar New Zealand will cancel its policies at the end of this year – regardless of whether those policies had time left to run.
In September, Ansvar – which is facing $700 million of claims in the wake of Christchurch – announced that it would no longer renew earthquake cover when existing policies expired.
That announcement, in effect, gave the various denominations notice – the earthquake cover on the 400-odd Anglican Churches in New Zealand, for example, ran until March 31 next year.
Not any longer. The last three months of that six-month notice no longer apply.
All Ansvar’s policies in New Zealand will be cancelled on December 31.
The chairman of the Anglican Insurance Board, Don Baskerville, describes today’s announcement as “most inconvenient.”
Don says Ansvar Australia will partially fill the gap.
It will continue to offer cover to Kiwi churches for material damage – for liability, fire and burglary loss, but not earthquake damage – for the balance of the policy year, ie in the case of the Anglican Church, until March 31.
Back in September, Ansvar had retained a British reinsurance broker to see whether he could find Lloyd’s of London syndicates willing to replace the earthquake cover which Ansvar could no longer offer.
Don says he has had meetings with the broker concerned – Paul Butler of Thompson, of Heath and Bond – who has undertaken to report back by the first week in December.
“He is confident,” says Don, “that he can find the cover. I am not confident about the price of that cover. The prices will be ugly.”
The AIB, working with the Methodist Church, has also hired Marsh, an international firm of insurance brokers, to find replacement insurance “by a different route to that employed by Ansvar.”
The Marsh investigation will allow the AIB and the Methodists to compare the price and terms of any deal that Marsh comes up with against the Paul Butler proposition.
Furthermore, the Marsh exercise will investigate replacing all existing church cover – so if the terms are attractive enough, Anglican churches won’t have to rely on the three month buffer that the Australian Ansvar operation is offering.
In the best-case scenario, all new church insurance policies could be in place on January 1
Because Ansvar has cancelled the earthquake cover part way through the policy year, they must return the part of the churches’ earthquake insurance premium that hasn't yet been used.
So the Anglican Church will get three month’s earthquake insurance premium repaid.
Of course it then faces having to arrange replacement earthquake insurance for the cancelled period – and the cost of that replacement earthquake insurance will be steep. Steeper than the cancelled insurance.
Don says the AIB is taking up that issue with the Ecclesiastical Insurance Group (the UK-based parent of Ansvar). It wants them to “mitigate the impact of this added cost on the affected churches in New Zealand.”
Meanwhile, the AIB is still aiming to honour its undertaking to report back to the 400 odd Anglican churches on their best insurance options by Christmas.
As a first step, it will be convening a special meeting with the registrars and secretaries of the various diocese and hui amorangi (in effect, dioceses of the Pihopatanga, the Maori Anglican church) on December 8.
Don Baskerville emailed the news of the latest Ansvar development to the various Anglican secretaries this morning – and told them he was continuing to work on their behalf.
“Fixing this problem for the church,” he wrote, “is my life at present.”
Footnote: The full text of Ansvar's November 24 release is available here.