Housing NZ reaches $320 mln insurance settlement with Vero, Lloyds, Aon, others

Housing New Zealand has reached a $320 million settlement with insurers led by Suncorp Group’s Vero unit over 5,559 homes damaged in the Canterbury earthquakes, $110 million less than the state agency had originally claimed.

The settlement involves for insurers in New Zealand, 23 in the UK and Europe, Lloyds of London and insurance broker Aon and is the largest-ever single insurance payout in New Zealand, according to a statement from Housing Minister Nick Smith.

The reduced payout reflected early repayment and a repair timeframe that was cut back to three years from five years, reducing the escalation clause, Smith said. The negotiations “were complex and challenging,” he said.

Housing NZ has spent $16 million so far on 221 vacant damaged properties and $8.3 million on some 27,000 health, safety and asset protection jobs in the city, Smith’s statement said.

“Our commitment is to return the level of social housing stock in Canterbury to the same as it was prior to 4 September (2010), but in a better state,” Smith said.

In keeping with current policy, more one and two-bedroom units will be built and fewer three-bedroom homes. Housing NZ is also dispersing its properties rather than build concentrated housing estates.

The total cost of insurance claims for the Canterbury earthquakes was estimated at $30 billion, according to the Reserve Bank.

Shares of Suncorp rose 0.2 percent to A$11.855 on the ASX and are up 14 percent this year.