Owners of unreinforced masonry buildings built before 1935 have had a difficult time in the last 12 months as insurers try to balance their books in the wake of the Christchurch earthquake. A number of property insurers have pulled out of the market entirely and those who remain have slammed owners with massive premium hikes and restricted cover.

Even in Auckland full cover based on the reinstatement value of such buildings is proving difficult to obtain. Owners of buildings which have a rating of less than 34% of the New Building Standard are in many cases being offered indemnity cover only, which can be equal to less than 40% of the full replacement cost.

Now all that could change with a new initiative from insurers keen to step in and provide full cover against all perils, including earthquake and other natural disasters, at realistic premiums on properties in Auckland, Northland and the Waikato.

Stamford Insurance, a specialist broker, is now able to offer cover with Lloyd’s of London on unreinforced masonry buildings. The sum insured can be based on the re-building cost of the property and cover can also include loss of rent insurance.

Stamford has been working with several syndicates for months to negotiate the new cover and now anticipates strong demand from owners, their financial partners and mortgagees.

A spokesman for the company said “The Lloyd’s market has a reputation for stepping in where others fear to tread and has been the world’s leading specialist insurance market for many years. Lloyd’s has an A+ rating from Standard & Poor’s (Very Strong) and will satisfy the most demanding clients in terms of security.”

To be eligible for consideration, full details of the risk must be submitted, including a recent seismic engineer’s report and current valuation. That information is assessed locally and then sent directly to London for a quotation, so at the moment cover is only available where the reinstatement value exceeds $10M. In theory there is no upper limit. It is hoped to extend the scheme to lower value properties later in the year.