New Zealand mutual liability trust fund Riskpool has withdrawn its professional indemnity and public liability insurance for possible claims related to Christchurch building consents.

It comes after the city council lost its International Accreditation New Zealand approval as a building consent authority.

The withdrawal would require the council to meet liabilities under the Building Act from its own funds.

“We are moving quickly to gain clarity on Riskpool’s position and what the implications are for the council,” the authority’s Corporate and Financial Committee Chairman Helen Broughton said.

“We are seeking legal advice, and will be meeting with Riskpool to discuss the position further.”

The council says Christchurch receives a number of the claims each year, each with a maximum excess of $NZ50,000 ($42,480).

Canterbury Earthquake Recovery Minister Gerry Brownlee says the city should have the capacity to absorb any liabilities resulting from the Riskpool decision.

The Insurance Council of New Zealand (ICNZ) says it will monitor developments following the loss of the accreditation.

A government manager is to work with the council to address problems and help it regain its consents status from International Accreditation New Zealand. The Government plans to have recent consents audited.

ICNZ CEO Tim Grafton says building consents will still be issued and the government measures should provide confidence.

“We have no reason to believe there are significant issues regarding the consenting process that would affect the insurability or integrity of residences and commercial buildings,” he said. “We will naturally keep a watching brief on developments and the outcome of the audits, but at this time it’s business as usual.”

The government manager will join the council on July 15 and is expected to remain until December 31 next year.

Meanwhile, the Insurance and Savings Ombudsman is acting to ensure home insurance policyholders understand the implications of the shift from full-replacement to sum-insured cover following the earthquakes.

It has published a consumer information sheet and will hold a “webinar” on the topic for advisers on July 16.

Some 270 grievances were raised with the watchdog in the financial year just ended, with sum-insured cover and fraudulent claims among the key issues.