EQC could get bailout from Government

The Christchurch and Kaiko¯ ura earthquakes have blown through the Earthquake Commission’s funds, expected to run out early next year.

EQC’s National Disaster Fund has now dropped below $200 million, the point the Government moves to step-in, and is on track to be fully depleted in the first quarter of next year.

The fund currently sits at

$171m, a far sight from the $6.4 billion available just before the Christchurch quakes struck in

2011. But EQC is backed by a Crown Guarantee which says the Government will bail out the national disaster agency if need be, meaning those still going through the insurance process will be covered.

A spokesman for EQC Minister Megan Woods said the Government had forecast the fund would run out and had budgeted appropriately. ‘‘Cantabrians can have confidence the Government is standing behind the [National Disaster Fund] and the money necessary to complete the job of repairing homes will be available.’’

It’s the first time in the 72 years EQC has existed that the commission has needed a Government bail out.

The National Disaster Fund is effectively EQC’s pot of money, which is built up from the EQC levy on residential insurance policies and investment income from money held in the fund.

If there are no further significant natural hazards, the levy increases are expected to see the fund grow to $1.75b over the next 10 years.