Business insurance freeze down under cripples recovery

A business insurance freeze has crippled the recovery efforts of one New Zealand city, prompting one city business leader to urge the Government to intervene in Christchurch’s plight.

Peter Townsend, chief executive for the Canterbury Employers’ Chamber of Commerce, remarked that the commercial insurance market in Christchurch was in dire straits due to its increased premiums for current customers and its freeze on writing new policies for prospective customers.  No real progress will happen without a free-flowing business liability insurance market, Mr Townsend added, stating that this freeze is the largest issue Canterbury businesses are currently facing.

Without proper business cover, such as professional indemnity insurance cover, the majority of businesses operating within Canterbury could not make meaningful financial decisions or get bank loans, said Mr Townsend.  Remarking that businesses can no longer wait for the situation to change on its own, the chief executive urged the Government to intervene, which might require the assumption of a portion of the insurance burden for a short period of time to give both insurers and businesses some certainty and security.

Insurance providers instituted a temporary freeze on all new commercial insurance plolicies in Canterbury after the earthquake on 4 September of last year. However, every major shake afterward has resulted in the reinstatement of this freeze, leading to no opportunities for businesses to take out any policies since 22 February.

Lindsay Kerr, of Cristchurch-based insurance broker IC Frith & Associates, commented that his office had not sold a single new policy with the exception of vehicle and liability insurance.  Insurers refuse to increase their exposure, Mr Kerr admitted, especially in light of the recent quakes on June 13.

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