Reforms to EQC Act announced
Reforms to EQC Act announced
Finance Minister Steven Joyce and the Minister Responsible for the Earthquake Commission Gerry Brownlee have today announced plans to simplify and improve the EQC scheme for New Zealanders.
“EQC has provided huge support to New Zealanders following the Christchurch, Seddon, and Kaikōura earthquakes,” Mr Joyce says.
“This review has provided us the opportunity to consider how the scheme could work more effectively for future natural disasters.
“Everyone with a private insurance policy, that includes fire insurance for their residential building, will continue to receive EQC cover,” Mr Joyce says.
Mr Brownlee says the reforms will have no impact on the handling and outcome of existing EQC claims.
“The reforms we are announcing will simplify the relationship between the EQC scheme and private insurance and help provide faster and smoother resolution of claims following a major event,” Mr Brownlee says.
The reforms are:
· Increasing the monetary cap from $100,000 (plus GST) to $150,000 (plus GST) for EQC building cover.
· Clarifying EQC land cover is for natural disaster damage that directly affects the insured residence or access to it.
· Standardising the claims excess on EQC building cover at $1,000. This currently ranges from $200 to $1,150 depending on the size of the claim.
· EQC no longer providing any residential household contents insurance.
· Requiring EQC claimants to lodge claims with their private insurer who would pass the claim on to EQC (if the property is insured).
“Requiring EQC claimants to lodge claims with their private insurer will help EQC and private insurers work better together in future.
“Following feedback from the Discussion Document issued in 2015, changes were made in response to submitter concerns regarding the treatment of land damage affecting residential buildings, the previously proposed $2000 excess and the idea of combining building and land damage cap amount,” Mr Brownlee says.
Further work now needs to be done on the details of a scheme that will incorporate the features announced today.
The Government hopes
to release a draft of an EQC reform bill later this year or
early next year, with the changes anticipated to be
implemented in 2020.
Notes for editors:
Q: What will change the most for homeowners?
A: Homeowners will have a further $50,000 of building damage covered by EQC. Their contents insurance will be covered by their private insurer and homeowners will lodge claims with their insurer in the first instance.
Q: What will the cost of these planned reforms be to the homeowner?
A: As announced in Budget 2017, the EQC levy will increase up to $69 per homeowner per year from November 1 2017. Standardising the excess on an EQC claim means all homeowners will pay $1,000 (including GST) for building claims. Overall, we expect there to be little, if any, change in private insurer costs as EQC will be taking on more building cover from insurers, lowering their proportion of homeowner premiums.
Q: Will EQC continue to insure land?
A: The reforms simplify how land damage is covered by EQC and how land and building damage interact. Damage that directly affects the property and/or access to it will continue to be covered by EQC. Land cover is also retained in total loss situations where a site cannot be repaired or rebuilt on.
Q: What has EQC learnt as a result of recent natural disasters?
A: EQC and private insurers have been working much more closely together following the February 14 2016 aftershock, the Kaikōura earthquake, and the recent flooding in Edgecumbe.
The Memorandum of Understanding signed between EQC and private insurers for Kaikōura has allowed some of the proposed reforms to be tested and has led to a streamlined process with a better outcome for the customer.