Marlborough District Council approves rate increase to cover rising insurance costs
Marlborough District Council approves rate increase to cover rising insurance costs | Insurance Business New Zealand
Insurance News
Marlborough District Council approves rate increase to cover rising insurance costs
Mayor highlights importance of fully insuring district’s assets
Insurance News
By
Roxanne Libatique
Residents of Marlborough will see a rate increase of 13.6%, partially to address rising insurance premiums for the area.
“Marlborough District is facing the same insurance premium cost pressures as other councils around New Zealand. These costs are outside our control, although we have been able to make some savings by reducing our insurance cover in some areas,” said Marlborough District Council CFO Geoff Blake. “However, [the] council needs to find an additional $548,000 for 2024-25 to cover the increased premiums.
“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 [the] council’s rates increase for this financial year would rise from 12.96% to just over 13.6%.”
In a recent extraordinary meeting, council members decided to fund this increase through rates.
“It is frustrating that it has to be rates funded at this point in time, when the good work has been done through the LTP process and we thought we had got to a conclusion, but we also realise the reality of the situation and the reality is we must keep Marlborough insured,” she said, as reported by RNZ.
Insurance renewal process for Marlborough District Council
Blake described the insurance renewal process as difficult, citing numerous changes in the insurance market over the past months.
The council received its insurance quotes on June 26 and subsequently secured alternative professional indemnity and public liability coverage from AON by June 30.
The revaluation of the Three Waters assets raised the material damage cover from $775 million to nearly $1.2 billion for the 2024-25 year. Additionally, public liability and professional indemnity coverage were reduced from $300 million to $15 million, which Blake noted as a growing challenge to secure.
General Counsel Robert Foitzik explained that the previous $300 million cover was unusually high, with the largest payout in New Zealand being $30 million.
Council staff proposed funding the insurance increase through rates, allocating $548,000 for 2024-25 and $300,000 for 2025-26. This adjustment will result in a 0.64% rate increase for the current year. Reserve funding was not recommended due to depleted reserves, and postponing payment would lead to higher costs in the future.
The council also agreed to undertake a strategic review of its insurance and budget processes.
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