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Ngā Rū o Waitaha
Ngā Rū o Waitaha
Between September 2010 and the end of 2011, 4 major earthquakes and more than 11,200 aftershocks shook the residents of Christchurch and surrounding towns. Those shakes, collectively known as the Canterbury earthquake sequence, were the biggest insured event in Aotearoa New Zealand history and at the time the 4th most expensive insured, global natural disaster to ever occur.
More than 650,000 insurance claims have been made as a result of the quakes. More than 168,000 of these have been made with private insurers.
To date, the combined events have cost private insurers more than NZ$21 billion. Toka Tū Ake EQC has paid a further $10 billion, bringing the total insured cost of the event to more than $31 billion.
Total economic losses for the entire sequence are estimated to be more than NZ$40 billion.
At current premium rates, it would take private insurers around 40 years to pay off the cost of the Canterbury earthquake sequence provided no other earthquake claims were received in that time.
Given these high costs, it’s important private insurers maintain good profitability and reinsurers continue to remain in the Aotearoa New Zealand market. It’s these factors that ensure we’re covered for such large-scale events.
In Canterbury, anyone whose house or contents were damaged in one of the earthquakes had to first lodge a claim with the Toka Tū Ake EQC Earthquake Commission (EQC). Toka Tū Ake EQC would investigate and pay out up to its cap ($100,000 for a house and $20,000 for contents) then transfer any claims amounting to more than these caps (known as over cap claims) to people’s private insurers.
The process of investigating and transferring over cap claims has been slow. As of mid-2018, private insurers are still receiving an average of 2 over cap claims a day from Toka Tū Ake EQC.
To help improve the claims process and settle things faster for affected customers, following the Kaikōura earthquake in 2016, Toka Tū Ake EQC and private insurers worked under a partnership model where insurers acted as agents of Toka Tū Ake EQC, investigating and paying out claims for their customers directly. Toka Tū Ake EQC then reimbursed private insurers for the under-cap portion of all the claims they managed.
This model worked much more efficiently. One year on from the event, 83% of all property claims relating to the Kaikōura earthquake had been fully settled.
Since 2016 ICNZ has worked alongside its members and Toka Tū Ake EQC to develop a new model for all natural disasters. In November 2020 Toka Tū Ake EQC, ICNZ and eight private insurers announced the new partnership model to provide an improved, more collaborative approach to supporting New Zealanders through natural disasters in the future.
Under the new partnership, from 30 June 2021 anyone with home insurance whose home or land is damaged in a natural disaster can lodge the claim through their private insurer. Customers will then work with their insurer who will assess, manage and settle their claim, ensuring a more effective and efficient response, and delivering simplicity and certainty for customers during a very stressful time.
The recovery in Canterbury was complicated by a number of factors.
Court cases were often needed to set precedent on a number of issues regarding the interpretation of insurance contracts. This slowed down progress for not only the customer involved in the court case but other customers waiting to see how the courts would rule.
Some of the key rulings on policies in Canterbury post-quakes included determining what should happen when:
Insurers did more than just resolve claims for people in Canterbury. They worked hard to help the recovery effort, including