Insurers have geared up for another defensive response as the fifth anniversary of the 22 February 2011 earthquake that hit Canterbury came around today, bringing with it the ever-brighter spotlight on the insurance industry.
While tributes and services of remembrance dedicated to the 185 dead have been organised today, yesterday a gathering of a different nature took place.
Roughly 1,000 disgruntled homeowners congregated in Christchurch’s Cathedral Square, many holding placards with messages including ‘Honour Your Policy’, ‘Regulate the Insurance Industry’ and ‘EQC is Corrupt’.
Individual insurers were also targeted, with messages such as ‘We’re in a TOWERing rage’ and ‘In Vero
The protest organisers said they wanted an external review of the way the Earthquake Commission (EQC) handled insurance claims and a deadline put in place on the time allowed for the Commission and insurers to settle claims.
Labour party leader Andrew Little backed their call for a deadline to get the claims sorted and said an inquiry was needed.
“There’s no question there will be another big earthquake in New Zealand sometime and we should learn from the Canterbury earthquake but we won’t learn from it if we don’t record what has happened and reflect on it,” he said.
Insurance Council of New Zealand (ICNZ) CEO Tim Grafton released a statement stressing the $17 billion of residential and commercial claims its members had already settled.
“We understand the frustration experienced by people who have suffered from a major event,” he said. “But looking back, our industry has at times been the convenient by-word for delays.
“In many instances, delays were not of insurers’ making and were beyond their control.”
He said it was ‘not true’ that claims had not been honoured, as protesters had said.
“Where there is disagreement about the scope of repair, insurers must rely on independent experts like engineers to advise them.
“If there are differences of opinion then insurers have helped fund an independent Residential Advisory Service to provide free legal advice and technical assessments for second opinions.”
Grafton gave a long list of reasons for claims to be delayed, including unstable land with subsequent earthquakes stalling a major repair and rebuild program; geo-tech tests needed to determine the damage to the land and unique solutions; land zoning and new building codes being introduced; and long delays in the consenting and council inspection processes.
Other reasons given were:
- Skill and material shortages disrupting the rebuild process;
- Delays with underground service connections;
- Contaminated land sites needing to be cleaned up;
- Mass land movement areas across the Port Hills that had to be assessed;
- Land remediation for liquefied land had to be researched and developed from scratch;
- Ways of compensating people for land damage had to be developed;
- The legal complexities and agreements required to progress multi-unit buildings on cross-leased titles where some people were uninsured.
“This is not to say mistakes were not made,” Grafton admitted. “But best endeavours have been made to genuinely make progress as quickly as possible.
“We have learned from what happened, we have made changes and believe more can be done to improve the response to the next event when it happens,” he said.
A report by the Reserve Bank of New Zealand (RBNZ) released last week also drew attention to the crucial role the industry had in reducing future uncertainty around the rebuild.
It estimated that 20% of claims were yet to be paid, with the bulk of commercial building reconstruction yet to start.
“Several insurance-related legal issues have been clarified as Canterbury has recovered from the earthquakes, but the process of resolving disputes has been a factor delaying the settlement of insurance claims, hindering the pace of the rebuild,” the report said.
“Increasing the speed of resolution of insurance claims will provide greater certainty for households and businesses following future disasters, aiding recovery.”
The report acknowledged that while the rate of insurance settlement had been slower on average than that for the major earthquakes in Japan and Chile that occurred at similar times, this reflected in part the much greater number of claims and differences in contracts.
“Assessing the cost of replacement for a damaged property is administratively more complex than a cash settlement,” the report said.
“Uncertainty regarding the final cost of replacement as both private insurers and EQC conduct their own claim assessments have also delayed the settlement of some claims.”
The report pointed to the EQC review which was looking at the structure and parameters for future EQC cover, and the hope that it would ‘build on the experiences of the Canterbury earthquakes.’
Minister for Canterbury Earthquake Recovery, Gerry Brownlee, said both the EQC Act Review and the Independent Review of the Civil Defence Emergency Management Response to the Christchurch Earthquake would ensure lessons from Canterbury would be retained.
He said the focus would now change from recovery to regeneration, the rate of which he envisaged would accelerate.