Christchurch City invokes arbitration over $528m of damage claims against Aon

Tuesday, 31 October 2017

Christchurch City Council is seeking $528 million from Aon New Zealand following its 2011 earthquake insurance claims.

If the council is even partially successful the money will go a long way to improve its financial position and reduce reliance on ratepayers for recovery and enhancement projects.

Some earthquake damage at Lyttelton Port is yet to be repaired.

The council initiated arbitration against Aon, which provided insurance broking services over material damage and business interruption.

Christchurch City received just over $600m for damages and business interruption in 2016 from Vero but it claims that omissions by Aon caused it to recover less than it should have, hence the $528m claim.

Lyttelton Port alleges Aon's shortcomings meant it should have have received more than $445m for its earthquake claims.

* Lyttelton Port settle quake insurance claims

* Port of Lyttelton faces uninsured future**

Aon said it had meritorious defenses and intended to vigorously defend itself against the claims.

'As always, Aon is committed to driving the best possible outcomes for our clients. In accordance with company policy, Aon does not comment on pending legal matters,' Geoff Blampied, chief executive of Aon New Zealand, said.

A city council spokeswoman was equally tight lipped. She said the provisions of the Arbitration Act required confidentiality.

Another action against Aon is under way in the High Court in Christchurch from Lyttelton Port which issued proceedings in June, 2015.

An initial ruling was made in December 2016 over what documents each side must produce for the main hearing.

Lyttelton Port is seeking $184m. It received a $445m payout from its insurer Vero but claimed Aon was negligent and failed in its duty as insurance broker to arrange full cover.

In the December case in which Aon sought more documents, the Lyttelton Port lawyer said it would cost more than $1m and many months to produce them.

One of the allegations from Lyttelton Port was that Aon advised against insuring reclaimed land with the two parties disputing who gave instructions not to value it.

However, the court ruled Aon had failed to establish that the number of documents it sought was proportionate, and ordered it to pay costs to Lyttelton.

The main case is yet to be heard, unless settled by negotiation.