Insurers want a law change so in future people are forced to use EQC land-damage payouts on fixing their sections rather than pocketing the money or spending it elsewhere.
Current law requires the Earthquake Commission to compensate for land damage, but it does not require owners to spend the payment on fixing the land.
Insurance council chief executive Tim Grafton said the Canterbury earthquakes had shown there could be situations where land was not totally destroyed and it was possible to rebuild on it if it was repaired.
The council has put its position on the issue in its 2013 annual review released yesterday.
Grafton said the current law required EQC to compensate for land damage but it did not require land owners to spend the payment on fixing the land.
''So technically there's the payment and you don't have to do anything to the land. You can't just build on land that is stuffed. So we think land compensation should be directed to land remediation because that's what it is about.''
Land damage payments were introduced after the 1979 Abbotsford land slip in Dunedin, which ruined 69 houses.
The payment was to enable the owners of the wrecked land to buy a minimum-sized section, he said.
Earthquake Minister Gerry Brownlee said he was sympathetic to the insurers' view and it could be considered as part of the review of EQC legislation.
The issue was not a separate piece of work but part of an overall examination of what EQC should cover in a review of the EQC legislation, he said.
''The bigger question moving forward is what are we likely to have? All I can say is that is a significant component of work in the current review of EQC's coverage.''
Brownlee said there were several categories of land damage that EQC was making land claim assessments on. Others were land that had increased vulnerability to liquefaction and flooding because of the earthquakes.
''The question the review has to consider is, is the cover adequate and does it protect the building platform as it was originally intended to?''
Brownlee said that because insurers generally had replacement policies at the time of the quakes, they had to replace to the new building code, which was now requiring stronger foundations.
Because the review of EQC coverage was still happening he did not want to pre-empt the results , ''but I think you can probably pick up that I can understand their position quite well.''
Brownlee signalled any changes to the EQC Act would not likely apply to existing Canterbury land damage claims.
"It can't be retrospective,'' Brownlee said of legislative changes.
The result of the EQC review was ''not too far off'' and there would be a public process before any changes to the Earthquake Commission Act were made, Brownlee said.
EQC has settled 79,000 land claims so far, of about 140,000, at a cost of $17 million and has said it aimed to settle them all by the end of the year.
EQC spokesman Iain Butler said properties with increased susceptibility to liquefaction and to flooding had not been dealt with. EQC was still working on identifying those properties and the methodology to settle those claims.
- The Press