Pritchard joins AMI Insurance board

File photo

The government has appointed John Pritchard to the board of AMI Insurance, extending its influence over the troubled insurer after agreeing to bail it out to the tune of as much as $1 billion.

The move comes after AMI last week flagged it may not have enough reserves to cover household claims from the two Christchurch earthquakes, and forms part of the government's support arrangements.

Pritchard has more than 40 years experience in the insurance industry, and has formerly served as managing director of State Insurance, a board member of the New Zealand Insurance Council and is currently a member of the technical advisory committee at the New Zealand Export Council, according to the statement from the Treasury.

"John Pritchard brings many years of experience to the AMI board of directors," Brian McCulloch, Treasury's director of commercial transactions, said in a statement.

"He will help the company with working through issues that it currently faces."

AMI has drawn sharp criticism from competitor in the wake of the bailout with claims the company had purposefully maintained a low level of reinsurance cover compared to the rest of the industry in order offer cut-throat prices.

The insurer had the single-biggest exposure to the residential insurance market in Christchurch, with about 35 per cent of the market.

It is the nation's second-largest residential insurer with 485,000 policyholders and 1.2 million policies.

In Christchurch it has more than 85,000 policyholders with 225,000 policies, according to a statement from Finance Minister Bill English.

AMI chief executive John Balmforth said last week that his firm has reserves in excess of $350 million as well as additional reinsurance of $600 million.

Only once these have been exhausted will government support be triggered.