The Queenstown Lakes District Council needs to reconsider its insurance cover, to protect more than $400 million in uninsured assets against the cost of a future natural disaster, one of its senior managers says.
And two other Otago councils with underground assets worth more than $150 million have been left without complete cover following the two Christchurch earthquakes.
The Waitaki and Clutha district councils are among 59 local authorities left exposed after a $40 million fund providing infrastructure insurance to councils was exhausted by Christchurch earthquake claims.
The Local Authority Protection Programme (LAPP) fund, administered by Civic Assurance, provided 40% cover against infrastructure damage in a natural disaster, with the Government contributing the rest.
Claims from the Christchurch City Council and Waimakariri District Council have exhausted the fund and required reinsurance totalling $192 million.
Fund representatives met Government officials last week to seek help while the fund's stocks were replenished, Civic Assurance chief executive Tim Sole, of Wellington, said when contacted.
Mr Sole hoped to hear from Finance Minister Bill English by May, and said it would be a "great shame" if the fund folded.
In Otago, the Waitaki and Clutha councils are fund members.
The Dunedin, Queenstown Lakes and Central Otago councils and the Otago Regional Council all make their own arrangements.
QLDC deputy chief executive and financial manager Stewart Burns said the council had private insurance for claims up to $133 million covering council buildings and other above-ground structures.
However, the council had "never" insured below-ground assets, including water pipes and other reticulation infrastructure, valued at an estimated $144 million, or roads, valued at an estimated $287 million, he said.
"The premiums were prohibitive at one point, plus we had a flood [in 1999] and people weren't keen on actually giving us any cover if we wanted it, anyway," he told the Otago Daily Times.
With other councils reviewing their insurance arrangements after the two Christchurch earthquakes, Mr Burns believed it would be prudent for the QLDC to do the same.
Councillors had not resolved to undertake such a review, "but it's something from a management point of view I'd suggest is appropriate".
QLDC had a $1.3 million emergency fund built up since flooding in 1999, although Mr Burns conceded it was "not a huge amount of money".
Insurance arrangements were "a judgement call, I suppose", but the region - like Waitaki and Clutha - did not have all its assets concentrated in one location, he said.
"There are some centralised areas where assets are at risk, but our district is very much dispersed. It's not like you've got a city where there's a lot of concentrated risk."
Clutha District Council corporate services manager Alan Dickson was unsure where the council stood now the LAPP fund was exhausted.
The council had its own $2.7 million emergency fund, but it also paid $35,000 per year to the LAPP fund to insure about $80 million of pipes and other underground infrastructure, he said.
Without LAPP cover, the council could face an unexpected bill if disaster struck.
"At the moment we'd have no insurance ... If we had a significant disaster we'd have to front up with some money somehow.
"There could be a significant cost, but probably something we may be able to meet through borrowings and diverting other budgets."
The Waitaki District Council paid about $25,000 a year to the LAPP fund to cover about $86 million in assets, and maintained its own $3.8 million relief fund, council strategy group manager Richard Mabon said.
Without the LAPP fund, the council was exposed to 40% of the risk of a disaster, and would be forced to call on its own fund, depreciation reserves and bank credit, Mr Mabon said.
CODC chief executive Phil Melhopt said the council had its own disaster relief fund worth "several million dollars", but had been considering joining LAPP to extend its coverage.
"Those two earthquakes [in Christchurch] have obviously upset that."
The Dunedin City Council was not an LAPP member, but had private insurance cover for damage of up to $200 million per event, covering above and below-ground assets, financial controller Maree Clarke said.
However, the Christchurch quakes had triggered a review of the DCC's insurance arrangements, which was under way and could identify the need for changes, she said.
