Insurers ditch terror cover

New Zealanders may soon find themselves uninsured against acts of gang intimidation as insurance companies seek to define their risk after the September 11 terrorist attacks in America.

The Insurance Council says New Zealanders in future are unlikely to get insurance cover for terrorism, which could include any unexpected act of intimidation, ranging from Osama bin Laden associates to local gang members.

Council chief executive Christopher Ryan understands that insurance companies are writing to companies to tell them their terrorism cover has been removed, or will be within a month or two.

Mr Ryan said Australian insurers now appeared to define terrorism so broadly that "you have no cover for unexpected acts of intimidation. It is possible that this will be the situation here".

He said it was unlikely insurers would wait for policies to run out, but that they would have to tell policy-holders about any changes.

International insurance companies have been refusing to provide insurance for terrorist attacks since the World Trade Center attacks and the change will affect New Zealand insurance companies which are overseas-owned.

Until now, standard policies have covered acts of terrorism simply because they were not specifically excluded.

The change potentially affects everyone from individual policy-holders through to central Government.

Mr Ryan said the Government needed to consider the potential for a terrorist attack on structures like the Clyde Dam, the Auckland Harbour Bridge or the Sky Tower. "The reality is there may not be cover for those sorts of situations."

He said it was clear that reinsurers considered New Zealand a potential target by removing terrorism cover.

If they felt that New Zealand would not be attacked, they probably would not have made any changes to terrorism cover.

The council has offered to help the Government set up a working group to investigate options to make sure protection is available to those who need it.

- STAFF REPORTERS