The Earthquake Commission (EQC) has paid out nearly half a billion dollars to settle claims in Canterbury in the financial year to 30 June 2016, according to its annual report released today.
Figures in the report show that in the 2015/16 financial year, EQC paid out $495 million in claims for the 2010-2011 Canterbury earthquake sequence. This total was made up of $441 million for residential building claims (both for cash settlements and managed repairs), $46 million for residential land claims and $8 million for contents claims.
CEO Ian Simpson said that EQC recovered about $444 million of the cost of Canterbury claims, largely from international reinsurers in 2015/16.
“In Canterbury as at 30 June 2016, we had completed repairs on more than 67,000 homes, settled 187,000 contents claims and completed claims for land damage to 66,000 properties,” Simpson said.
EQC has now spent $9.4 billion (including claim handling expenses, excluding GST) in its response to the 2010-2011 Canterbury earthquake sequence. This sum has been financed from the Natural Disaster Fund and by the reinsurance cover EQC had negotiated prior to the earthquakes.
“The overall estimate for the Canterbury claims expense has remained relatively steady, increasing by $30 million to $11.279 billion. In addition to this there is a risk margin of $278 million relating to the 2010-2011 Canterbury earthquake sequence,” Simpson said.
“In the year to 30 June 2016, EQC also paid out $25 million for claims other than those arising from the 2010-2011 Canterbury earthquake sequence. This figure includes $4.7 million for claims arising from the February 2016 earthquakes in Canterbury.
“Our aim is to have cash settled the more than 14,000 claims from the February 2016 earthquakes by the end of the year.”
While EQC had assets of $2.1 billion and liabilities of $2.5 billion at the end of the financial year, EQC had adequate funds to continue to operate and to meet its financial obligations, Simpson said.
“The Crown has confirmed in writing that it will meet its obligations under section 16 of the Earthquake Commission Act to ensure that EQC can meet all its liabilities as they fall due.
“The liabilities figure is a snapshot of what EQC potentially owes as at 30 June 2016. It includes a risk margin of $297 million and $146 million in premium income EQC has received but canonly account for in the next financial year. This income is treated as a liability because technically if we had ceased to trade on 30 June 2016, we would have had to pay it back.”
The report shows that EQC received about $280 million in premiums and spent $210 million on expenses, excluding claims payments and claims handling expenses for the 2010-2011 Canterbury earthquake sequence.
“Our largest expense was the $150 million in premiums for reinsurance, which currently provides New Zealand with access to $4.69 billion in cover for natural disasters, once the cost of these events exceeds the deductible,” Simpson said.
EQC provided $11.5 million in funding to GeoNet, New Zealand’s natural hazard monitoring system. This included an increase of $1.5 million to upgrade and develop GeoNet’s systems for monitoring earthquakes, volcanoes and other geological hazards.
“In the upcoming year, EQC will continue to be present in Canterbury resolving remedial requests on properties where we have managed a repair, and resolving claims for drains damaged by the earthquakes. There is also a range of administrative and financial tasks to be completed,” Simpson said.
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