Insurers are seeking further information on the extent of land damage in the Canterbury area and warning that green zone land may not yet be suitable for property repairs.

Insurance Council of New Zealand (ICNZ) President John Lyon says continuing aftershocks are complicating the reconstruction.

“The reality is that there’s a lot which is outside the control of insurers,” he said last week. “For example, the ongoing risk of liquefaction, decisions on whether land will be retired or not, access to the CBD and waiting for key buildings to be demolished.”

The ICNZ board met in Canterbury last Wednesday to show solidarity with the population and to address concerns about insurance cover.

The council says insurers will do all they can to return to normal conditions when the aftershocks cease and there is a clearer understanding of the status of the land.

It says that not all properties in the green zone can be repaired because of damage to the land underneath them.

A green zoning generally means the land is suitable for houses to be repaired or rebuilt, but ICNZ says insurers do not yet know the full extent of land damage.

Liquefaction occurs when seismic shaking causes water to rise to the surface and land to subside. As it occurs below the surface, it can be hard to assess the damage.

The council says insurers are also concerned that aftershocks will cause further damage to properties on liquefacted land.

Marsh NZ Associate Director and Head of the Placement Team Nathan Richmond says insurance coverage varies between companies, with some applying exclusion zones and others prepared to look at customers on a case-by-case basis.

“There is certainly a focus on liquefacted areas,” he told insuranceNEWS.com.au. Companies are looking at the geology of the eastern coastline and whether properties may be affected by liquefaction.

Mr Richmond says there has been a huge increase in demand for broker advice, and the hours required to negotiate a renewal have increased. “There is more time and information required and more strategy required going into renewals than there ever has been.”

Like many in the industry, he believes there will have to be a “significant period where there is no event” before insurers regain confidence to deploy capital in the zone.

Lumley NZ GM Broker Products Paul Munton says once the company is confident the seismic activity has abated “to acceptable levels for a reasonable period of time, we will revisit our risk appetite for the region”.

“We are currently renewing all existing policies in Canterbury, albeit some with amended terms to reflect the increased risks,” he told insuranceNEWS.com.au.

If a policyholder’s home is damaged beyond repair, the insurer is providing cover on a home they either buy or have built on land that has been deemed safe. The company provides contracts works insurance while the new home is being built, and cover when it is finished. 

For customers buying and selling within the zone who have not been affected by the earthquakes, Lumley is covering the new owner of the home that was sold, subject to underwriting criteria.

When customers are selling their home and buying a property that is insured with another company, it has been agreed the other insurer will provide cover for the Lumley customer.