Marlborough Council convenes extraordinary meeting to address insurance premium surge

Marlborough Council convenes extraordinary meeting to address insurance premium surge | Insurance Business New Zealand

Insurance News

Marlborough Council convenes extraordinary meeting to address insurance premium surge

What is expected to be discussed at the meeting?

Insurance News

By
Jonalyn Cueto

Marlborough District Council is set to convene an extraordinary meeting on Thursday to address pressing concerns over substantial increases in insurance premiums for the upcoming financial year. According to a news release, the meeting is scheduled to commence at 8:30 am, preceding the Environment and Planning Committee’s session.

Geoff Blake, the chief financial officer of Marlborough District Council, highlighted the challenges posed by recent adjustments in insurers’ risk assessments tailored for the New Zealand market. These adjustments have precipitated a significant rise in insurance premiums, necessitating the Council to seek an additional $548,000 to adequately cover these escalated costs for the fiscal year 2024-25.

“Although we had budgeted based on a 20% increase, the final figure exceeded that and could only be finalised at 30 June 2024. Because this is an on-going operational cost it is recommended that this year’s increase is funded from rates,” Blake said. “This would mean Council’s rates increase for this financial year would rise from 12.96% to just over 13.6%.”

Notably, this adjustment places Marlborough below the national average rate increase of 15% observed across New Zealand’s councils this year, as outlined in a report by Local Government New Zealand (LGNZ).

The council, in collaboration with AON under the Local Authority Protection Programme (LAPP), secures critical insurances covering infrastructure essentials like underground reticulation and river control assets. Additional coverage spans commercial structures, residential facilities including senior housing units, and diverse assets, such as motor vehicles and liability protections.

Historically, Marlborough benefited from a softer insurance market post-2016, following the aftermath of the Canterbury earthquakes, which yielded a 20% annual reduction in premiums. However, recent market shifts towards a “hardening” phase, exacerbated by global reinsurer dynamics, escalating building costs and national and international events, have necessitated a strategic reassessment of financial allocations. This unprecedented “hardening” cycle has been forecasted to prolong, underscoring the imperative for judicious financial planning and resource allocation within local governance.

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