'The earthquake didn't break me. EQC almost did': Lessons from Christchurch inform transition

File photo. Photo: RNZ / Nick Monro
File photo. Photo: RNZ / Nick Monro
Parliament’s looking at a new Bill which aims to make life easier for people whose lives have been affected by major disasters, including the human disaster created by failures of the Earthquake Commission in its response to the Christchurch earthquakes 11 years ago.

A Public Inquiry into the Earthquake Commission, led by Dame Silvia Cartwright, resulted in a report two years ago that highlighted shambolic and inept handling of the almost half a million claims following the quakes.

As Labour MP Ingrid Leary told the House, there were many claimants who have gone through the ringer, “who spoke of the lack of operating procedures, poor communication, the repeating of details of their case over and over to different people, which was re-traumatising, and the delays in getting things resolved.

“One person in their submission said, ‘The earthquake didn't break me. EQC almost did’.

“So there were high stress levels, reports of suicidal feelings, and post-traumatic stress, the effects of living in quake-damaged homes for months—or, as we've heard from Nicola Grigg, even for years—and ongoing injuries that happened,” Leary explained.

Ingrid Leary.
Ingrid Leary.
“The inquiry heard about the pressure on assessments, of quantity over quality, that assessors sometimes had to assess up to five dwellings per day, and people admitting that they had spent hundreds of thousands of dollars on lawyers and sometimes given up trying to get the claims that they were entitled to, because they had given up the battle with the Earthquake Commission.” 

In a bid to prevent this sort of torture, and to prioritise the needs of claimants, the government has taken up most of the Inquiry report’s recommendations, incorporating them in the Natural Hazards Insurance Bill which would replace the Earthquake Commission Act 1993 and change the name of the Earthquake Commission to Toka Tū Ake – Natural Hazards Commission.

Introduced by David Clark, the Minister responsible for the Earthquake Commission, the Bill proposes a code of conduct defining the rights of claimants, and provides for a dispute resolution service, among other things.

“The bill introduces a range of measures to update the financial governance of the commission to reflect modern practice and to require at least a five-yearly review of the scheme's key financial and risk management settings,” he said during debate on the Bill’s First Reading.

David Clark. Photo: ODT
David Clark. Photo: ODT
“Many of those living in mixed- and multi-use buildings across Canterbury and, again, in Wellington, following the Kaikōura earthquake, had a difficult time resolving multiple insurance claims for damage in their building or complex. The bill proposes rules that are clearer and easier to determine the amount of compensation to be paid.

“Changes proposed will make it easier for people with retaining walls, bridges, and culverts to understand what compensation they could receive if these are damaged.”

According to Clark, the bill clarifies regulations relating to repairing buildings and land following a landslip or other land damage. 

“It also sets a date for the increased EQC cap of $300,000 to come into effect. Increasing the EQC cap should lead to reduced premiums for many New Zealanders as the Crown absorbs liability and risk from private insurers.”

The move to double the cap to $300,000 was welcomed by Gerry Brownlee, the former minister who led the previous National government’s response to the earthquake disaster - and copped much flak for it.

He said it was difficult for anyone to prepare for major disasters but described the new Bill as timely.

An earthquake-damaged home in Sumner. Photo: RNZ / Diego Opatowski
An earthquake-damaged home in Sumner. Photo: RNZ / Diego Opatowski
“EQC can't go away, nor can the natural hazards arrangements that will come after this. They're there permanently, and those claims don't shut. And that, I think, has been a cause of quite a bit of difficulty for successive Governments as they've dealt with those particular issues. But I think it's important that that remains one of the open aspects of this type of coverage.

“EQC was one of the biggest purchasers of reinsurance of any company in the world. It's something that perhaps we struggle to get our heads around. We're only covering 5 million people. We're covering the dwellings that exist across the country that number only in the few million. But, none the less, because they were one big buyer, they were able to buy very, very well,” Brownlee reckoned.

The Bill expands the Commission’s remit to also cover other natural hazards such as a tsunami, landslide, hydrothermal or volcanic activity, flood, storm, or a natural hazard fire.

Still, National’s Stuart Smith identified a space rock-sized hole in the Bill.

“I think it's clause 23 where it defines the events that would be covered by the commission. It doesn't include meteor strikes—a very unlikely event, but it is something that can and does happen. Meteor strikes, actually, are covered by reinsurance, and most—not all, but some—existing insurance policies do cover meteor strikes. If we are going to have a sort of socialised insurance cost, surely that would be one of the things that should be covered,” Smith said.

Having passed its first reading, the Natural Hazards Insurance Bill now goes to the Finance and Expenditure Committee for consideration, and they’ll be asking for public feedback on it.


- By Johnny Blades, The House Journalist

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