Kaikoura – A Year On, A Sad Indictment on Insurers and EQC

7 November 2017
Kaikoura – A Year On, A Sad Indictment on Insurers and EQC

EQCfix concerned things are still not being done correctly in Kaikoura

EQC (via private insurers) is continuing to apply an incorrect part of the EQC Act in its assessment process of earthquake damage in Kaikoura.

The Insurance Council of NZ has today suggested the model being used in Kaikoura where insurers are acting as agents for the Earthquake Commission (EQC) and are managing most of the building and contents claims, is “the model for (sic) (the) future as it has proven to deliver efficiencies for everyone by reducing double handling and speeding up settlements”.
Christchurch accountant and advocate for insurance and EQC claimants, is sounding a word of caution, as the Government reviews the way claims are managed with the ICNZ advocating for insurers to continue to assess and manage all claims in future.

“There are some positives in this proposal but insurers certainly need to get their own houses in order before they start taking on EQC’s work. We are almost a year out from the anniversary of this event and only 65% of building claims have been settled. People are living in garages, some haven’t even seen an assessor yet; we don’t see that as something to be proud of,” he says.

Continuing to be of concern to claimants support group EQCfix, with whom Preston works, is that private insurers assessing damage in the seaside town have been advised by EQC to use a part of the EQC act that wrongly defines replacement, contrary to a joint agreement signed last April.

All claims related to the Kaikoura quake are being cash settled, and as such EQC agreed in a joint statement with a group of claimants last April that “replacement” in cash settlement situations means “as new”.

Cam Preston says EQC documents he has received under the Official Information Act clearly show EQC, via the private insurers, has been and continues to use section 9(1)(a) of Schedule 3 of the EQC Act which says "replacement" means “not exactly or completely but only as circumstances permit and in a reasonably sufficient manner”.

“That is not ‘as new’ and EQC agreed last April they would only use that part of the act when it was a ‘managed repair’ as it was under the Canterbury Home Repair Programme with Fletchers,” says Cam Preston who says this can significantly reduce the financial settlement someone receives. “The main concern of the group is that claimants are likely to be negotiating replacement of damaged property at a level that is significantly below the standard of replacement that they are entitled to, according to the Joint Agreement signed last April.”

EQCfix is concerned that ICNZ seems happy to the point of celebrating, that almost a year after the Kaikoura earthquake, only 65% of house claims are settled (and what does that actually mean?), while assessors continue to use the wrong interpretation of the EQC act.

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