New Zealand insurer Tower has posted a $NZ21.5 million ($20.4 million) full-year loss amid further Canterbury earthquake claims and IT impairment charges.

It says it will create a separate company – RunOff Co – dedicated to resolving quake claims, allowing it to “draw a line under the Canterbury legacy” and improve prospects for the underlying business.

In the past year the company has received about 300 new Canterbury claims, with a significant number of “over-cap” claims from the Earthquake Commission (EQC). The state-owned EQC covers the first $NZ100,000 ($94,899) of a claim.

“In our view, the industry model is broken, with claims inflation continuing unabated, construction far slower than anticipated and little effective co-ordination between the EQC and insurers,” Tower Chairman Michael Stiassny said.

“These are all symptoms of a system that can no longer do right by the people, communities or insurers it is supposed to service.”

Tower’s result for the year to September 30 compares with a loss of $NZ6.6 million ($6.3 million) the previous year.

The company has reported a $NZ25.3 million ($24 million) impact from additional Canterbury provisions and a $NZ14.1 million ($13.4 million) impairment related to an IT infrastructure review.

Gross written premium eased to $NZ303.2 million ($287.7 million) from $NZ305.6 million ($290 million) and underwriting profit fell 24.6% to $NZ19.8 million ($18.8 million).

Investment revenue fell to $NZ8.5 million ($8.1 million) from $NZ14 million ($13.3 million).

Tower says its core New Zealand operation is strong, the Pacific business has unrealised potential and initiatives established earlier in the year to improve performance are beginning to take effect.

Shareholders are expected to vote in March on the plan to create RunOff Co.