New Zealand insurer, Tower Limited has declared its intention to create a separate company to handle claims emanating from the Canterbury region around Christchurch.
The company signalled its intention at the same time as reporting a loss of $21.5 million for the year ended 30 September, 2016, which it said had been impacted by further adjustments to IT impairments and Canterbury provisions.
It said Canterbury continued to present a complex and difficult situation for all insurers and this was why the Tower Limited board had announced its intention to create a separate company dedicated to Canterbury claims resolution “to assist the market more transparently value Tower”.
The company’s announcement to the Australian Securities Exchange (ASX) said its full-year dividend would be placed on hold to retain capital to facilitate the structure separation.
Commenting on the creation of the separate company, Tower chairman, Michael Siassny said the legacy of the Canberbury earthquakes continued to overshadow fundamental improvement.
“In our view, the industry model is broken with claims inflation continuing unabated, construction far slower than anticipated and little effective coordination between the EQC and insurers,” his statement said. “These are symptoms of a system that can no longer do right by the people, communities or insurers it is supposed to serve.”
Siassny said the company had “resolved to draw a line under the Canterbury legacy” to benefit both policyholders and shareholders interests.
