Christchurch’s six-year war on insurance
Insurance has dominated the postearthquake landscape of Christchurch. Six years on from the ruinous February quake, thousands of claims remain unsettled. Is that acceptable? reports.
Six years ago, Karen Price wanted a new kitchen. The old one was a bit cramped. Her house had plenty of room but was built on a small footprint – floorage spread across three storeys on the steep side of Mt Pleasant, in Christchurch’s east. A better use of space was needed. Designs were drawn up.
Today, the new kitchen is nowhere to be seen. If anything, it is even further away. The company that designed it doesn’t exist any more and the Prices are six years deep into negotiations, first with the Earthquake Commission (EQC) and now their insurer, over earthquake damage.
Insurance has been the abiding story of Christchurch’s earthquake recovery. All up, it will contribute between $21 billion and $22 billion to the recovery. Other, arguably more important, stories have faded or emerged, but insurance has remained resolutely in the headlines throughout.
It has endured , accusations of and delaying tactics, two years of aftershocks and geotechnical assessments that stalled rebuilding efforts, from EQC and , most crucially the , which ruled EQC was liable for multiple earthquakes and had to decide what damage happened when.
That is not an exhaustive list and it is still growing. Figures released by the Insurance Council this month show . Some of the delays that led us to this situation were inevitable. A small percentage of cases turned litigious when claimants and insurers couldn’t agree.
Others have found their way to court through class actions. Some cases were incredibly complex, such as multi-unit dwellings, where homeowners shared land ownership and different insurance companies. Some claimants yet to settle were now their own worst enemy: stressed by years of delays and financial wrangling and now paralysed by indecision.
Then there are cases like the Prices. Mired in the back and forth of reports, inspections and assessments. Looking at their case, there is no obvious reason why it should still be unresolved after all this time. It just is.
‘‘The terrible thing is it sort of normalises it,’’ Brent Price says.
‘‘You walk around now and you don’t see the cracks. You just become immune to it.’’
Price walks around his house, cataloguing the damage as he goes: This is the crack that runs from the driveway right through to the bottom of the section, these windows have been boarded over for six years and these are the braces I put in to prop up the balcony.
Does that cladding look fine to you? Come closer and check out all the tiny cracks. He has given this tour, either in his head or to other visitors, a million times.
‘‘I feel quite bitter about it,’’ he says of the ongoing claim.
‘‘It’s potentially a third or a quarter of the good life that I’ve got left. And you’re sitting here in Groundhog Day.’’
The Prices’ home incurred most of its damage in the February 2011 earthquake. It was assessed by EQC in short order – July 2011 – but then the apportionment issue arose and damage had to be attributed across three different events. It passed to Southern Response – claims management company for the old AMI – in December 2013 where it has sat since.
By Christchurch standards, this is pretty good. Insurers have been critical of EQC overcap referrals arriving on their desk four, five or six years after the fact. A state of affairs Insurance Council chief executive Tim Grafton labels ‘‘totally intolerable’’.
‘‘That should never happen again . . . there’s a whole reputational piece to that. People in that situation lose confidence and trust in insurance.’’
Six years is long enough for the insurance industry to see what has worked in Christchurch and what hasn’t, but an assessment on progress is elusive. Yes, there are many, many things insurers could have done better, but a bunch of roadblocks emerged as well.
To say conclusively whether 3000 unsettled claims six years on is or is not OK is difficult.
‘‘I remember being asked by Campbell Live, I think it was 2013, when everything would be settled,’’ Grafton says.
‘‘At the time I said I was confident the vast majority of claims would be settled by the end of 2016. Back in 2013 what we knew was we had slightly less than 22,000 overcap claims. At the end of 2016 we had settled just under 23,000 claims. Had the number of claims we had in 2013 as overcap not been added to, we’d have been finished.’’
Which is not to say it’s all EQC’s fault. It has 167,000 house claims on its books, not to mention land and contents, and a managed repair programme to run. Even if you wanted to apportion blame, it’s simplistic to argue that because a claim took five years to be referred on that it was mismanaged.
Eight months after the Prices’ claim went overcap, Southern Response’s project manager, Arrow, assessed the property. It produced a damage report in September 2014. The Prices thought it was low, asked Southern Response to take another look, and commissioned their own experts in the meantime. (Southern Response says it was advised by the Prices ‘‘from the outset’’ they would be engaging their own experts).
And so for the last two years the two sides have been trading reports concluding varying amounts of damage to the property. The Prices have hired a building expert and a solicitor to advocate for them. A Southern Response spokeswoman says the case is ‘‘particularly complex’’.
‘‘Because of the nature of the property’s design and the materials used it has required more expert assessments than is typically required to determine what damage was pre-existing or earthquake-related.’’
Each report, whether commissioned from Southern Response or the Prices, has been shared and fully reviewed by all.
‘‘As the claim progressed, more information has come to light which has required further investigation in order to develop the right reinstatement solution for the Prices … We are committed to working with them to settle their claim as quickly and responsibly as possible.’’
All of which doesn’t sound that bad. For a six-year-old unsettled earthquake claim, you’d think there would be more acrimony.
‘‘We haven’t actually openly disagreed about anything,’’ Karen Price said. ‘‘We’ve given them all the stuff that we’ve commissioned and they’re still doing their reports.’’
But the Prices are far from happy. Mostly, their frustration stems from a sense of only ever making progress when they started nagging. Or hired a lawyer.
They say they have spent $28,000 on their claim in the past three years (some of that has been reimbursed by Southern Response). Karen Price has a thick ring binder of documents dating back years, separated with section headings like ‘legal’, ‘invoices’ and ‘QS quotes’.
‘‘It’s interesting going back through some correspondence … and the tone of desperation we had then. That’s two to three years after the event.’’
Leanne Curtis has run Breakthrough Services since the start of 2016, facilitating claims settlements. Before that she had five years’ experience working for community earthquake advocacy groups, mostly CanCERN.
‘‘A lot of the reason why [the insurance process] has been so delayed [is because] we never had good leadership, in the insurance space, ever.
‘‘No good leadership out of Cera [the Canterbury Earthquake Recovery Authority]. The Government viewed it as an individual contract between the insurer and the homeowner …The assumption that we didn’t need the support services earlier, the assumption that insurers would just be able to handle all this stuff as individual insurance claims without truly understanding the customer that they were working with, the trauma that they had been through.’’
Most of the fault for this lies with insurers, Curtis says, but not so that you could solely blame the industry, or anyone else, for where we are today.
‘‘It’s not a yes-no answer. It’s too complicated. There are too many factors that would have led to us being in a different position. Some of them we could have done something about . . . some of them we couldn’t have.
‘‘I don’t go with the whole ‘delay, deny, defend’ thinking. It’s an unhelpful way of thinking. What I knew from CanCERN was there were times when the insurers and EQC couldn’t move because they didn’t have the answers that they needed to move to that next step … We did not know the story of the land to be able to design the right foundations. Those things took ages.’’
The latest for the Prices was a revised engineering report from Southern Response this month. They say it is little different from the first version they got, though their building advocate had to tell them this, as the documents have grown increasingly technical over the years. They also say they were told another report may be needed, as the author of this one has left the job. They have lived in their house 11 years. Or, put another way, more time with earthquake damage than without.
‘‘In that time I’ve semi-retired, our kids have gone through high school and left home and we’re still in this mess. We still count ourselves fortunate in that we can live reasonably comfortably here but it actually affects your whole psyche,’’ Brent Price said.