The Insurance Council of New Zealand (ICNZ) says claims that residents of the southern city of Dunedin may not be able to obtain property cover because areas of the city are prone to liquefaction in an earthquake is “a complete over-reaction”.

CEO Chris Ryan told insuranceNEWS.com.au the council has been unable to find anyone in Dunedin who has been refused cover.

Media reports last week claimed residents were unable to get insurance because a significant portion of flat land in the city was at risk of liquefaction during a major earthquake.

“The media reports don’t name the people,” Mr Ryan said. “Most reports have mistaken or they have misunderstood the situation.

“If people have been declined I have been unable to find them and it might be an entirely different issue why they have been refused.”

NZ’s two biggest property insurers, NZI and State, have also released a statement saying they would continue to cover people in that area.

Dunedin City Council last week released a statement saying it had included the warning in a “land information memorandum” so that residents would be prepared in case of an earthquake.

“This area has been identified as lying within a zone susceptible to amplified shaking in an earthquake. The council will require a site-specific design for any new building foundation construction in this area,” it said.