Following the earthquakes earlier this week, most insurers placed an embargo on the provision of new policies or policy amendments in large parts of the country.
The embargoes covered the top half of the South Island and the bottom half of the North Island, including Christchurch, Wellington and the Bay of Plenty.
This meant that property buyers in the middle of settlements, who had not already arranged insurance, would not have been able to do so.
There were fears this could not just delay settlements, but derail some sales completely.
However, this afternoon the Insurance Council announced that they had secured an agreement from all the major insurers which would alleviate the situation.
Insurance Council operations manager Terry Jordan said that, for property settlements occurring over the next days or weeks, insurers would issue policies to buyers if they were already the vendor’s insurer.
“So if you are purchasing a property and you find you can’t get insurance, approach the vendor’s insurer and they should be able to take you on, subject to the usual underwriting criteria.”
Things might be more problematic if the property a buyer was in the midst of purchasing had been badly damaged in the earthquakes, but that was likely to be an unusual situation, he said.
“Hopefully, this solution will help property buyers and sellers, real estate agents and lawyers at a time when insurers are nervous but want to do right by customers.”
Jordan said the agreement only applies to those who are currently in the midst of property settlements.
It does not apply to people who want to get new insurance policies for their properties or renegotiate the existing insurance policy on their properties. The insurers’ embargoes still apply in those situations.
This is a typical practice globally for the insurance industry following significant natural events like earthquakes, Jordan said.
“Insurers will automatically cut new insurance activity as reinsurers don’t want exposure to even greater losses in uncertain times.”
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