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Canterbury rebuild cost rises

New Zealand’s Treasury has increased estimated claims costs associated with the Canterbury earthquakes, as rebuilding costs rise.

Delivering his budget last week, Finance Minister Bill English told Parliament the total cost of rebuilding the city and surrounds is estimated at $NZ40 billion ($37.13 billion).

The Government’s share is expected to be $NZ16.5 billion ($15.32 billion), up $NZ500 million ($464.13 million) since the half-year budget update. Of this, $NZ7.27 billion ($6.75 billion) will be incurred by the Earthquake Commission (EQC), net of reinsurance.

The largest increase in operating costs relates to Southern Response, the company that took on the quake claims of AMI Insurance when IAG bought the insurer in 2011.

This is due to claims exceeding the EQC cap, and increased repair costs.

Southern Response forecasts claims expenses of $NZ290 million ($269.19 million) this year, making a total of $NZ800 million ($742.6 million) from 2011 to a forecast period to 2019.

This compares with $NZ555 million ($515.18 million) stated in the half-year budget update last year.

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