Takeover target Tower says it has been a “canary in the coalmine” for New Zealand industry problems following the Canterbury earthquakes six years ago.

CEO Richard Harding says insurers still lack clarity on the number and value of Canterbury claims remaining, and continued cost escalation is primarily driven by the Earthquake Commission (EQC) and litigation claims.

“The ongoing claims development situation is being faced by all insurers,” he told the annual general meeting last week.

“Unfortunately, as the only listed pure New Zealand general insurer, it is most visible with us. We are the canary in the coalmine.”

He says Tower is part of an insurance industry taskforce working with the Government and the EQC to review data, identify how many over-cap or new claims are impending, and ultimately seek to resolve issues.

The Kaikoura quake process is expected to benefit from the introduction of sum insured policies and earlier handling of claims by private insurers, under an agreement with the Government-owned EQC.

“These changes make it highly unlikely we will see a repeat of the outcomes experienced in Christchurch that have resulted in six years of escalating costs,” Mr Harding said.

Tower has received a $NZ1.17 ($1.07) a share takeover offer from Fairfax Financial Holdings, and a rival $NZ1.30 ($1.19) proposal from Suncorp, which has since built a 19.99% shareholding.

“We hope to be in a position to provide further details in the near future,” Chairman Michael Stiassny said.

“In the meantime, shareholders do not yet need to take any action in response to either of these offers.”

Mr Stiassny says the board may look to raise capital to protect the business from contingencies during a likely protracted process related to the takeover offers.