EQC settles repair bill with insurers

House insurers Tower and IAG have struck deals that will see EQC reimburse them for repairs they did after the Christchurch earthquakes that the state-owned natural disaster insurer should have paid for.

In the aftermath of the 2011 and 2012 earthquakes, the private insurers and EQC both did repair work on Canterbury homes under an agreement that they would work out where the costs should fall later.

But agreement on who should pay what proved hard to achieve, prompting Tower to sue EQC for more than $80m.

Now, Tower says EQC will pay it $42.1 million in a settlement that would end its legal action.

IAG, which owns the AMI, State, NZI, Lumley and Lantern brands, said the payment figure was commercially sensitive.

Last week Suncorp, which owns Vero and AA Insurance, also settled with EQC over the portion of costs of fixing earthquake-damaged homes that EQC should bear.

Tower chairman Michael Stiassny said the settlement provided certainty to shareholders.

Tower had settled for just over three-quarters of the amount it believed it was owed.

IAG chief executive Craig Olsen said both parties could now move forward with certainty. EQC chief executive Sid Miller said the settlement meant the businesses could draw a line under the past, and continue to focus on helping sort out any remaining claims for customers.

‘‘The series of earthquakes suffered by the Canterbury region caused a number of complexities in allocating building and land damage and the cost of repair between different earthquake events,’’ Miller said.

The cost of the settlement would be borne by EQC’s reinsurers.

‘‘This settlement is a significant milestone for EQC in our Canterbury Earthquake recovery programme.’’