Fletcher building expects insurance to cover costs of convention centre blaze

Tuesday, 26 November 2019

Video footage shows flooding inside the SkyCity Convention Centre after the fire.

Fletcher Building's insurance should 'respond' to the October fire that devastated the nearly-completed SkyCity Convention Centre.

In an update to the NZX sharemarket, Fletcher Building said its insurers had confirmed that, based on their assessment to date, the contract works insurance policy would respond to loss and damage resulting from the fire.

Contract works insurance is designed to cover damage caused to a building under development.

Firefighters contain the blze at SkyCity's New Zealand Convention Centre in October.

The company did not name the insurer, or tell investors whether the contract works insurance would cover the entire cost of completing the convention centre, which was due to have been completed before the end of the year.

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Prime Minister Jacinda Ardern visits the damaged New Zealand International Convention Centre with Auckland mayor Phil Gough.

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Fletcher Building, which was building the convention centre for SkyCity, also said its third party liability insurance policy was expected to respond where legal liability existed.

Third party liability insurance pays to remedy damage caused to other people's property, for example, when a fire damages other people's property at a property.

'Fletcher Building is working to determine the impact of the New Zealand International Convention Centre (NZICC) fire on the project's delivery timeline, costs, and cash-flows, and any potential impact on the construction provisions announced in February 2018,' the announcement to the NZX said.

A fire fighter removes his breathing apparatus and takes a deep breath of fresh air firefighters battled the blaze in the New Zealand International Convention centre in downtown Auckland in October.

Those expected losses on 16 large construction projects, including the NZICC, totalled $660m.

'The company confirms that based on information currently available it remains within these provisions,' Fletcher Building announced to the NZX.

The company expected to provide a further update at its half-year results announcement in February 2020.

Later this week the Fletcher board and chief executive will front the company's annual shareholder meeting at Eden Park in Auckland.

The fire at the NZICC blazed for days sending tiny toxic particles into the lungs and blood vessels of Aucklanders exposed to the acrid black smoke.

Particulate levels in the air in Queen Street were more than five times national air quality standards.

The cause of the blaze is not known. Early news reports speculated the fire may have been caused by an unattended blowtorch.

SkyCity told investors earlier this month that the fire-damaged convention centre would not be ready for conventions booked in 2021.

SkyCity chief executive Graeme Stephens said it was unclear what the impact beyond 2021 would be for the venue.

The announcement rules out any possibility of repairs being in place in time for APEC that year.