Australian website InsuranceNEWS.com has an article (here) on the concerns being felt by London underwriters on the issues associated with business interruption insurance, and the extent to which tougher regulations on strengthening buildings will affect the cost of repairs and rebuilding.
A couple of points of interest are the observations:
“… reinsurers are closely watching Christchurch business interruption issues because of their much larger exposure to the Thai floods, where disruptions to manufacturing caused global disruption in a range of industries.”
“…insurers and reinsurers want to know the extent to which the Christchurch City Council can increase seismic strengthening requirements for buildings that have to be replaced or repaired.”
Any policy or legal gains made by businesses here, have the potential to set undesirable precedents for the global insurance industry. Similarly, if the council is able to require that rebuilds and repairs meet new and tougher codes, then insurance companies will face higher costs. Will we see insurance companies seeking dispensations from new codes, seeking court action to prevent or review the new codes, or forcing their clients to rebuild elsewhere?
In a similar vein, some months ago, there was a blog entry on how insurers and reinsurers were concerned at being hurt financially by zealous health and safety requirements in the inner city Red Zone (here). In that situation too it was a case of watching Christchurch to see what undesirable precedents might be set.