EQC unprepared for another big disaster
New Zealand’s natural disaster safety net has no agreement with insurers to receive claims as happened after the Kaiko¯ura quakes, if another major event strikes.
However, the Earthquake Commission (EQC) believes its good relationships with insurers would lead to fast agreements if needed, chief executive Sid Miller says.
Miller, along with EQC chairman Sir Michael Cullen and deputy chief executive Renee Walker, was appearing at the commission’s annual select committee review at Parliament yesterday.
In answer to a question from the committee, Miller said they did not have an ‘‘off the shelf’’ agreement ready to go in case of a major disaster.
A deal with insurers after the 2016 Kaiko¯ ura earthquakes allowed homeowners to lodge claims with private insurers, who settled them and recouped EQC’s contribution. This followed EQC’s struggles managing claim volumes from the Christchurch quakes six years earlier.
The committee asked what EQC had ready while the Earthquake Commission Amendment Bill and the EQC inquiry report were in the pipeline, given that natural disasters were unpredictable.
Miller said they were in the process of talking to insurers to consider ‘‘what we might look to put in place in terms of interim arrangements’’.
Together they were evaluating the Kaiko¯ ura model ‘‘and what things we might do to improve the way we operate today’’.
Walker said they had ‘‘much better relationships with insurers’’ than in the past.
Cullen told the committee that even with 400 staff now, EQC was unprepared for another major event.
‘‘EQC before Christchurch had no capacity to do anything – the size of its staff was laughably small.’’
They were now ‘‘flat out’’ trying to settle the tail of claims from the Canterbury and Kaiko¯ura quakes, Cullen said.
The option of working with insurers ‘‘made sense’’ because of their greater resources and international links, he said.
‘‘EQC can’t maintain a permanent staff sufficiently large enough to cope with a Christchurch-sized event, or indeed potentially even larger ones.’’
Also on Wednesday, National Party EQC spokesman Stuart Smith criticised the Government’s blocking of his proposed change to the EQC Bill.
The change, rejected during the bill’s third reading, would have allowed all future diaster claims to go directly to private insurers, allowing them ‘‘to be resolved efficiently and in a timely manner’’, Smith said.
He said that while EQC Minister Megan Woods was waiting for the next piece of legislation to address the issue, ‘‘natural disasters don’t wait for bureaucratic processes’’.
‘‘Instead the Minister is prepared to leave Kiwis in limbo, dealing with an extensive, slow and painful settlement process.’’
EQC has reported that its rate of settling Canterbury claims has sped up to nearly 1000 a month, but about half that many new ones are coming in each month.
It now has 2378 open claims on its books, significantly fewer than the 3617 it was managing in May.
As recently as July, EQC was settling only about 160 Canterbury claims a week, but last month it settled 967 – more than 240 a week.
The number of open claims is trending downwards, from 3259 in August to 2631 at the end of October. Another 489 claims were lodged in November.
In response to a critical ministerial report to Woods earlier this year, EQC has adopted a case management approach, giving claimants one point of contact.
Walker said there was still room for improvement but they were heading in the right direction.
EQC’s settlement solutions head Ros Jerym said simpler claims were being settled within three weeks, and some drainage claims within 48 hours.