There are three insurers said to be involved in the fire damage to the New Zealand International Convention Centre at SkyCity. Photo / File
There are three insurers said to be involved in the fire damage to the New Zealand International Convention Centre at SkyCity. Photo / File
American insurance giant Chubb is the lead insurer backing both SkyCity and Fletcher Building for last week's fire at the under-construction New Zealand International Convention Centre, the Herald understands.
A well-placed insurance source says Chubb has more than 80 per cent of the insurance cover, with the rest held byAustralia's second largest insurer QBE and Warren Buffett's Berkshire Hathaway.
"It's too much for one insurer to swallow. It's what we call co-insured."
But he said the companies were large insurers well able to handle a claim that was likely to run into the hundreds of millions of dollars.
Chubb, not to be confused with the security firm, is listed on the New York Stock Exchange and claims to be the world's largest publicly traded property and casualty insurance company and the largest commercial insurer in the US.
It operates in 54 countries and had more than US$174 billion ($273.3b) in assets. Last year it collected US$38b in gross premiums.
QBE Insurance Group Limited is Australia's second largest global insurer and operates in Australia, North America, Europe and the Asia Pacific region.
While Berkshire Hathaway is the world's largest financial services company by revenue and Buffett, its CEO, is one of the richest people in the world.
Warren Buffett, is chairman and chief executive officer of Berkshire Hathaway, which is said to be one of three insurance companies involved in the SkyCity fire. Photo / Bloomberg
"We know there is good cover in place and good insurers," the source noted.
SkyCity Entertainment Group has declined to name its insurer but says it's an international company and that the consequences of the fire in the roof of the new convention centre and the disruption to its existing facilities will be fully covered.
Chief executive Graeme Stephens told journalists last week he isn't sure he can disclose the insurer's name.
"We're comfortable with the credibility of the insurer and their ability to meet their obligations," Stephens said.
A cause of origin investigation will now be taking place with Fire and Emergency doing an investigation as well as representatives for SkyCity and Fletcher Building.
That investigation would likely take a few weeks with a finding made public due to the high level of interest in the fire.
In the meanwhile the companies would carry on as if they were fully insured and begin looking at what it would take to rebuild the conference centre.
The source said engineers would be brought in but because there may be structural issues with the floors no one would be doing anything quickly, he said.
SkyCity is said to be the principal of the contract works policy, with Fletcher Building the main contractor and sub-contractors also likely to be included.
The Herald revealed last week that the New Zealand arm of the NASDAQ-listed Willis Towers Watson is the insurance broker working on the deal.
But the insurance industry source said any potential legal action would be a long way away.
"I have no doubt people will be seeking insurance advice. I wouldn't be surprised if insurance lawyers all over town are getting put on stand-by."
But he said the processes needed to be followed first which included finding out the cause of the fire and what it would take to rebuild and repair the building.
Outside of the main insurance claim there are also numerous other claims expected from sub-contractors who may have had tools left in the building, to water-damaged cars and nearby businesses who may have suffered smoke damage and be claiming for business interruption.
Graeme Stephens chief executive of SkyCity Entertainment Group declined to name its insurers last week. Photo / Jason Oxenham
Other insurers are also expected to be closely watching the situation to allow them to understand how much of a risk they may be carrying through insuring other development projects.
"It won't make it harder to get insurance," the source predicted, "but it may cause pricing issues."
If a person or company is found to be negligent or grossly negligent the main insurer could go after the insurance of that person/company to claw back some of the money paid out.
But it is unlikely the person or company would be made bankrupt over the claim, the source believed.
