Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


$320m HNZ insurance settlement welcomed

Hon Dr Nick Smith
Minister of Housing

12 April 2013

$320m HNZ insurance settlement welcomed

The settlement of Housing New Zealand’s insurance claim over 5559 damaged homes is a significant and welcome step in Canterbury’s recovery from the devastating earthquakes in 2010 and 2011, says Minister of Housing Dr Nick Smith.

“This $320 million settlement is the largest single insurance pay-out in New Zealand’s history. This is great news for thousands of Housing New Zealand’s tenants, for Canterbury’s economy and New Zealand taxpayers,” Dr Smith says.

“The negotiations were complex and challenging. They took several months to complete and involved not only our lead New Zealand insurer VERO, but other New Zealand co-insurers, London insurers and Lloyds of London and Insurance Broker Aon. I was concerned, given the huge sums involved, that this claim could have resulted in years of litigation. I congratulate all parties involved for working to achieve this pragmatic and fair settlement.

“The greatest benefit from this settlement is that it enables Housing New Zealand to proceed with its repairs and redevelopment at pace. It can now get on and demolish, repair or redevelop its housing without the slow and bureaucratic process of having to individually check off each property with the insurer. This settlement enables the repair programme to be shortened from five to three years.

“Housing New Zealand can now move forward and reconfigure its stock for the future social housing needs in Christchurch. The new housing will have a lot more one and two bedroom units and less three bedroom homes. We are also moving from concentrated state housing estates to mixed communities, as research shows we can get better social outcomes.

“This significant settlement gives us the opportunity to rebuild Christchurch’s social housing so it is safer, better aligned to the need and of better quality than prior to the earthquakes.”

Questions and Answers

What was Housing New Zealand’s total claim and what was it based on?
The original total claim was for $430 million ($460m less $30m excess). It was based on what we could claim under our insurance policies to repair the damage to our houses plus business interruption costs.

The repair/damage portion of the claim comprised of costs across all technical categories: 17% Red Zone, 3% TC1, 36% TC2 and 43% TC3.

The number of properties under each classification is:

Damage categoryTC1TC2TC3No TCTotal
Structural424135115611
Non-structural62630607593594804
No damage2682630144
Total656338311164045559

Why is the final settlement less than the original claim?
The submitted claim was based on a five-year repair timeframe, which has now been reduced to three years. This has reduced the escalation component of the claim and due to early settlement Housing NZ will also earn interest on settlement monies prior to paying for repairs. In addition, we have a better understanding of the extent of damage and the appropriate repair methodologies.

Will HNZ be able to complete all the rebuilds and upgrades it needs to from this settlement?
The settlement covers the repair programme. Housing NZ has a 10-year rejuvenation and rebuild investment plan of $1.1 billion that will contribute to increasing and improving our housing stock. This involves ongoing negotiations with CERA and the Christchurch City Council.

How is the repair programme progressing?
We will shortly be starting the large scale repair programme following detailed scoping and trials to confirm that we can undertake the repair work with tenants remaining in situ. Already, 221 badly damaged vacant houses have been repaired prior to this settlement. Repair works on 180 houses are about to start in the Bishopdale area and a further 200 houses in the northern suburbs, including Kaiapoi and Rangiora, are about to be scoped for repairs.

How will today’s settlement impact this programme?
The settlement gives us the certainty and flexibility to make smarter decisions about our properties, particularly in relation to the longer term investment plan. It also enables us to move ahead with the repairs in the short term without needing to discuss each property with the loss adjustors. This is also a time saving advantage as we have shortened the original five year repair and rebuild programme to three years. In addition it enables us to accelerate work in the red zone to remove and repair suitable houses and then relocate them to provide tenants with accommodation.

How have repairs been funded prior to this settlement?
Repairs have been funded from reprioritising working capital that is available to manage a large housing portfolio. If this settlement had not been reached we would get to a stage whereby we would have required part payment from insurers to continue with repairs.

How much has HNZ spent on repairs to date?
Approximately 27,000 urgent health and safety and asset protection jobs have been completed to date costing $8.3 million. The 221 vacant damaged properties and other related repairs have cost $16 million.

Will HNZ focus on repairing all its stock or will it also demolish and rebuild?
Our focus is three-fold. The first priority is to complete the 5000 repairs at minimal disruption to our tenants. At the same time we to build up to 700 new houses. Our 10 year investment plan details an extensive work programme to demolish older stock and build in a way that contributes to the revitalisation and rejuvenation of some of the worst affected suburbs.

Will the make-up of state housing change as a result of this settlement?
The longer term investment plan for Canterbury identifies a different approach to social housing so that we are in line with international best practice for mixed communities. This means developing medium density housing and building new houses which will reduce the average age of Housing New Zealand’s properties. The settlement gives certainty to our ability to get on with this work now rather than later.

Will there be the same, more or less state houses available in Christchurch as compared to pre-earthquake?
Our commitment is to return the level of social housing stock in Canterbury to the same as it was prior to 4 September, but in a better state, by December 2015.

Over the next 10 years the average age of the Housing NZ properties will be halved to 23 years. This will occur through planned intensification on existing land by demolishing 1300-1400 current homes and replacing them with the same number of new homes and releasing new sections/houses for sale to the market. HNZC is looking to raise $439 million from the sale of up to 2700 houses and $122 million from the sale of land.

How many insurers are involved in this settlement?
Four in New Zealand, led by VERO, and 23 in London/Europe.

Why did HNZ have EQC cover for just the December 2011 claim?
HNZC was unable to obtain private insurance for its properties in Christchurch for the insurance renewal period 31/10/11 to 31/10/12 so EQC cover was put in place.

What is the size of the EQC claim?
EQC is still assessing our properties and we are working closely with them. Our initial estimate is in the range of $5m to $10m.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Aftermath Of The Greenwald/Snowden Revelations

The credibility issues have come down to two main ones:

1 The email This has to do with whether Key knowingly agreed to use our immigration rules as a tool to ensnare and ultimately extradite Kim Dotcom, and do so largely at the behest of Hollywood’s leading corporates and their best friend in the White House, vice-President Joseph Biden. Some of the debate in the last few days has turned on the reliability of a Warners email that seems to set out this plan in black and white. IMO, the email is just the icing on the cake...

2. Mass surveillance Earlier to day I was going to try to explain the difference between what Edward Snowden/Glenn Greenwald were talking about (ie mass surveillance via the the cable-accessing SPEARGUN programme and the Xkeyscore analytical programme) and what Key has chosen to talk about instead in order to deliberately distract and confuse the public. Then I found that Keith Ng had not only beaten me to it, but had done so with beautiful lucidity. More>>

Out-Link - "Project SPEARGUN underway" • OnPoint • Public Address

Statement From The Inspector-General of Intelligence and Security

“I am only able to comment on specific GCSB activities through my annual and inquiry reports. However, I can advise that I have not identified any indiscriminate interception of New Zealanders’ data in my work to date. I will continue to monitor these issues.” More>>

 
 

Parliament Today:

Pre-Election Chartering: Four New Partnership Schools To Open

Education Minister Hekia Parata today announced the Government has signed contracts to open four new Partnership Schools in 2015. More>>

ALSO:

Werewolf 50 Out Now - The Election Issue: Loss Leaders

Gordon Campbell: A third term requires a mature decision, with eyes wide open. It calls for a conscious vote of confidence… Without trying hard here are about 19 reasons, in no particular order, for not ticking ‘party vote’ National. More>>

ALSO:

Not-Especially New Plans: All Prisons To Become Working Prisons Under National

All public prisons in New Zealand will become full working prisons by 2017, and ex-prisoners will receive post-release drug addiction treatment if National is returned to government, says Corrections Spokesperson Anne Tolley. More>>

ALSO:

Māngere: "False Claim Of Matai Title" - Labour

National must explain why its candidate for Māngere Misa Fia Turner appears to be using a Matai title she is not entitled to, Labour’s MP for Māngere and Pacific Islands Affairs spokesperson Su’a William Sio says. A Matai title is a legally-recognised ... More>>

ALSO:

CPAG Report: No New Zealand Child Should Grow Up In Poverty

Child Poverty Action Group's flagship policy publication Our Children, Our Choice: Priorities for Policy calls for cross party political agreement to underpin an action plan to eliminate child poverty in New Zealand. More>>

ALSO:

Gordon Campbell:
On National’s Phantom Tax Cut Package

Hmmm. So National’s tax cuts package turns out to be one of those television advertisements that screams a headline promise – perfect skin! a youth tonic that works! – while in very small print there’s an out clause: special conditions may apply. More>>

ALSO:

Water: New Marine Reserves On West Coast Opened

Five new marine reserves were officially opened by Conservation Minister Dr Nick Smith on the West Coast of the South Island to protect a range of marine ecosystems for conservation, science and recreation. More>>

ALSO:

Perception: Study Looks At Trustworthiness And Support Of Politicians

A University of Canterbury marketing study has looked at what impact the Thatcher Effect has on perceptions of trustworthiness and liking of New Zealand politicians leading up to the 2014 general election. More>>

ALSO:

History Lessons: Jamie Whyte At ACT Campaign Opening

It is nearly 20 years since the ACT party was born. Many people no longer remember why it was named ACT. They may imagine that it was on account of our determination to actually do things in parliament rather than simply occupy the seats and collect the salaries. That’s true but it isn’t the right answer... More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news