By ADRIENNE KOHLER
Rate bills could rise to cover higher insurance premiums facing local bodies as the shockwaves of September 11 continue to reverberate.
Fear is also growing that the rising cost of insuring visiting world-class art exhibitions could mean New Zealand galleries will no longer be able to afford them.
The world reinsurance market is still trying to recoup losses nine months after the terror attacks on the World Trade Centre and the Pentagon.
The fallout is hitting local bodies, as many have to renew their insurance this month.
Councils across New Zealand are facing insurance increases of 30-100 per cent, so many may have to pass costs on to ratepayers.
Hamilton City Council had a 10 per cent rise immediately after September 11, due to its October 31 renewal date, and expects at least 20 per cent this year.
Wellington City Council's bill has risen by more than $1 million and could contribute to a proposed rates rise.
Auckland City is facing a 30 per cent increase in insurance costs, according to Bruce Lovejoy, director of insurance brokers Jardine Lloyd Thompson, which specialises in the local government sector.
The rising cost of insurance has also caught museums and art galleries.
This week, the Museum of New Zealand Te Papa revealed that its insurance bills could double from the $500,000 it now pays to cover its collection, touring exhibitions and building.
Auckland Art Gallery is also facing rising costs.
Director Chris Saines said insurance bills were likely to be 30 per cent more for static exhibitions, and premiums for travelling shows had also risen substantially.
The cost has just risen from $7000 to $47,000 for sending an exhibition to Dunedin of works by the French painter James Tissott, whose painting Still on Top was stolen from the Auckland Art Gallery and later recovered damaged.
Mr Saines said the higher insurance costs might mean previously affordable overseas shows would now be too expensive to bring to New Zealand.
A government indemnity scheme helps offset some of these insurance costs, but few exhibitions meet funding criteria.
The Auckland Museum public relations and sponsorship manager, Karyn McClare, said the museum was still negotiating next year's insurance premium, but was preparing for a 30 per cent rise.
Some businesses, meanwhile, have already been hit by 40-60 per cent increases in premiums since September 11.
Bruce Goldsworthy, manager of advocacy services for the Employers and Manufacturers Association, said these had been significant increases, but businesses had to get smarter with their insurance.
They needed to shop around and find a broker who would ensure cover was tailored for their specific needs, and look at adopting risk management strategies.
"When they've done that, they've been able to achieve more competitive premium rates," he said.
David Russell, of the Consumers' Institute, said that although it was mainly the commercial sector affected, it was inevitable rising costs would be passed along in some form to consumers.
There was also a danger some businesses on the edge simply would not be able to absorb the higher costs and would go under.
"Alternately, all business will be looking closely at their insurance cover, and may cut back, sustain a loss, and then take the hit on that."
Attack aftershocks
Insurance markets have changed markedly since September 11. How does this affect you?
Domestic
Little change in house and contents or car insurance, but some companies have removed terrorism clauses, as well as bioterrorism and nuclear war.
Health
Health insurance is not affected by reinsurance increases, but by disease and population age. Some companies, however, may pass on their increased insurance costs.
Travel
Rates had gone up 15 per cent across the board. Terrorism and war coverage have been dropped. Financial collapse coverage has also gone, but this is unrelated to September 11 events.
Aviation Immediately after September 11 all war risk insurance for airlines was cancelled.
For areas the insurance market will not cover, the Government has provided indemnity coverage for Air New Zealand planes, the Civil Aviation Authority and aviation security.
Businesses
The main areas affected are material damage, commercial property, business interruption, and key personnel, with increases of 20 per cent and higher. Rates increase if risk is deemed to be high, but some companies may give discounts if risk management strategies are in place.
Local authorities
Councils in high-risk earthquake areas will have the biggest increases. Higher premiums generally, especially for material damage and policies on buildings and standing assets, including art galleries, museums, stadiums and other properties.
Rural sector
Agricultural aviation insurance has risen 50 per cent and upwards. Prices for spreading fertiliser have risen accordingly.
Earthquake coverage
Earthquake risk is covered by the Earthquake Commission, up to $100,000 on houses and $20,000 for personal belongings. Insurance companies cover the excess, so cost of premiums may have risen depending on the amount covered and whether it is a business or private residence.
Story archives:
Links: Terror in America - the Sept 11 attacks
Timeline: Major events since the Sept 11 attacks
September 11 terror hits rate bills
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