Floods and terrorism spark insurance review

3.45pm

Recent floods and the threat of terrorism have sparked a review of the Earthquake Commission's role and the position of people with no insurance.

Finance Minister Michael Cullen said today the move was a reaction to the Government's consideration of flooding in the North Island.

It comes as it was announced Bay of Plenty councils are being given $3 million to help them put aside rates for businesses recovering from the July floods.

The Earthquake Commission (EQC) review will focus on disaster management and whether the commission's insurance coverage is appropriate or should be extended.

Dr Cullen said there would have to be very careful consideration of the potential implications of the second part for homeowners, insurance companies, the EQC and the Government.

The review would look at the extent of uninsured parties and whether it was possible to "incentivise" them to take out insurance.

There was also issues about uninsurable assets, such as farm fences, and the difficulty of providing cover against terrorism.

The review would look at whether the EQC should meet the costs of terrorism as well as natural disasters.

Local Government Minister Chris Carter said the $3m pay-out would mean "businesses and farmers struggling to rebuild will have one less bill to pay, and at the same time councils won't suffer a loss in revenue just when they need resources to restore their districts".

- NZPA