Westpac and Lumley have teamed up to provide home and contents cover for new developments and full-replacement rebuilds in the Christchurch region, in a move likely to be emulated by ANZ and Vero in coming days.

Westpac Private, Wealth and Insurance MD Simon Power says the move breaks the insurance deadlock that “has left hundreds in limbo and unable to get on with rebuilding their lives after the earthquakes”.

“We have listened to the frustration and anguish many of our customers have experienced through the lack of available insurance to build a new home and have been determined to find a practical solution.”

Westpac and Lumley have international reinsurance backing for the package, which includes a Westpac home loan and bank account, building work insurance and home and contents cover. Contract work cover is offered for up to 12 months during construction and covers natural disasters including earthquakes.

Home cover will be provided on a sum-insured basis that allows for full replacement up to a specified value.

Westpac says it expects such cover to become the norm, because the Canterbury earthquakes have changed the region’s risk profile in reinsurance markets.

ANZ and Vero are believed to be negotiating a similar arrangement, details of which are expected soon.

The Insurance Council of New Zealand says the move is “a response to a difficult situation where capacity is full or reinsurance doesn’t provide catastrophe cover on new developments”.

However, it is “pretty limited and quite specific in its cover”.

Westpac says the cover is restricted to its existing customers and covers residential builds only, not rebuilds. Special terms and conditions apply and each application will be individually underwritten and subject to acceptance and approval.