Tower Insurance has less than 50 remaining Canterbury claims due to come over to them from the Earthquake Commission (EQC), its CEO Richard Harding
Harding told Insurance Business
that the insurer had ‘just finished a piece of work with EQC’ and expected the remaining claims to come through in the next financial half.
The revelation comes after a dealing with a considerable volume of claims up to 31 March 2016, outlined in yesterday’s first half results
Harding said: “We started the half with 708 claims and finished the half with 640. In between there we settled 249 claims but we received 155 claims.
“That’s a combination of over cap claims coming from EQC and new claims coming from customers who are having their EQC claims finalised.
“So we’re getting driveways or footpath type stuff or accommodation claims coming in when someone’s under cap EQC claim is being settled.”
He said the rate had picked up due to concerted efforts from both EQC and Tower, who had appointed Deloitte as actuaries
to analyse outstanding and resolved Canterbury claims file by file.
“EQC have been putting in a lot of effort recently to get through their program and clear claims where they go over cap through to the industry, and in addition, Tower has put in a fair amount of energy recently to try to identify as many of the Tower customers within the EQC portfolio.
“We are now reasonably comfortable that we have that pretty well assessed and accommodated within our provisions.”
Indeed, a pre-tax provision increase of $2.9 million had been made, or $2.1 million after tax.
Last year Tower expensed $45.5 million, split $31.4 million in the first half year to 31 March and $14.1 million in the second half year.
The difference, Harding said, was now the end was in sight.
“It’s been quite challenging in the half, but it is reflective of where we are in the tail. We now have a clear line of sight of all the new EQC’s coming through and our goal is now to increase the momentum of settlement of the claims and get the remaining tail out.
“We think it’s another 12-18 months from here so we’ve very comfortable where we are. The strengthening in Canterbury is quite modest in respect to the overall position and really just reflects the complexity in that tail.”
He said future claim management expenses and an increase in underlying construction costs that had caused a dent in the first half results still meant the final cost was uncertain and was also a factor in wanting to get through Canterbury claims as soon as possible.
“That’s our goal,” Harding said.
“We’ve now finalised a piece of work with them where we’ve got our hands around the remaining ones that should come over and we want to bring those over in the next half.
“That will mean we won’t have a continued stream of new claims, we’ll just have the ones we need to finalise.”
Harding said while Tower did know the exact number of claims remaining, he was ‘reluctant to get into the minutiae’.
“I can tell you it’s less than 50. The precaution is more about not wanting to put EQC in an awkward position rather than ourselves,” he added.
The insurer said it had now settled 15,260 claims as at 31 March, representing 96% settled by the number of claims and 89% by value.
It estimated gross ultimate incurred claims of $822.3 million in respect of the four main Canterbury earthquake events.
The estimated ultimate incurred claims cost of the February 22 event totalled $449.8 million.