Wellington council under-insurance gap narrows by $800m, new figures show
Friday, 15 November 2024
The Wellington City Council’s long-term plan is up in the air again after it was revealed modelling for the insurance gap in the event of an earthquake was out by $800 million.
The need to review the long term plan was forced by a dramatic about face by councillors over selling the council’s stake in Wellington airport - initially intended to help plug the insurance gap. They now have to cut other spending to make up the shortfall.
But a previously reported under-insurance gap of approximately $2.6 billion was revealed on Thursday to be far lower, at $1.8b. Councillor Geordie Rogers said half of the $800m came from strengthening existing buildings, such as the Town Hall, while the rest was due to updated figures.
Wellington City Council, which must meet a deadline to amend the long term plan, is calling a meeting for councillors to discuss the figures next Monday.
An email leaked to The Post from Wellington mayor Tory Whanau addressed the issue, saying “this is new information for us”.
Whanau has organised a Q&A briefing on Monday afternoon after the meeting with Crown observer Lindsay McKenzie to talk councillors through the information and what implications it might have for the upcoming long-term plan amendment.
Revealed in a meeting agenda for November 20, council papers show the number has been dramatically reassessed, due to a combination of new modelling and the council’s purchase of $120m more capacity through its material damage policy renewals.
An insurance briefing was given to councillors on Tuesday.
Replying to Whanau’s email, Diane Calvert said it was concerning the information was given just after the briefing.
“Given committee papers are being drafted by officers at least one week prior to the publication, it is surprising that a reduction in the under insurance gap by about 30% was not material enough for officers to bring to our attention.”
Nureddin Abdurahman said it would “flip the whole thing upside down”.
His reponse to the email was that the insurance shortfall if the airport sale didn’t go ahead was grossly understated.
After the airport sale was stopped, Abdurahman asked for the insurance roadmap that had begun at the Audit and Risk Committee to be made public so councillors could make a decision based on proper financial information.
His request was denied.
In his view, the mayor rushed into a programme of cuts to community services which were now unnecessary.
“This is concerning as Councillors were threatened throughout the airport sale based on figures that were wrong, and communities have been put through turmoil as the Council has proposed cutting community facilities.
The papers explained: “A reasonable reduction in assumed risk is due to a number of factors that have occurred since the modelling was last done”.
The wholesale modelling process was last undertaken in 2015, with minor updates in 2018 ‒ as detailed in the Insurance Roadmap work completed to date, they continued.
Tim Brown said as it was a model figure, councillors needed to go through the details before they could interpret it.
“But at the end of the day, whether we're $2b short or $1.6b short, the model figure is grossly inadequate anyhow,” Brown said.
It is the third day on the job for McKenzie, appointed to keep an eye on mayor Tory Whanau’s council.