Decision pending on uninsured thousands

BY MATTHEW BACKHOUSE

The Government's earthquake relief bill could swell by millions of dollars if it opts to help out the thousands of Canterbury households without private insurance.

Estimates put the cost of repairs after Saturday's magnitude 7.1 quake at $2 billion, with claims from at least 100,000 households expected to cost the Earthquake Commission (EQC) about $1b.

People with private insurance could claim up to $100,000 on buildings and $20,000 for contents from EQC, after which their private insurance would kick in.

But an estimated 10 percent of Christchurch households did not have private insurance and were therefore ineligible to make claims through the EQC.

Prime Minister John Key said there were cases where some people had heavy damage to their homes, but did not have private insurance.

Cabinet would today consider the issue.

If it decides to extend its financial assistance to those without private insurance, the government's already hefty bill could swell by millions of dollars.

Insurance Council chief executive Chris Ryan said today that Christchurch's rate of uninsured households was fairly consistent with other large urban centres.

"In some areas of New Zealand, we've found 40 percent of people not insured, but Christchurch is a pretty modern and sophisticated city," he told NZPA.

People without policies generally tended not to insure their houses, contents, or possibly their cars.

"Businesses in large part tend to be a bit better insured because they're required to by their auditors or by their own company structures, so it will mainly be people in homes," he said.

"The two reasons people don't buy insurance generally speaking is they believe that they can't afford it, or they believe the chances of them being affected by a fire or a flood or an earthquake are so low that it's not necessary."

Floods and other weather-related disasters were constant reminders throughout the year that unfortunate events could happen, Mr Ryan said.

"But it still doesn't take away from the fact that a lot of people do believe that they can not have insurance and that it will be alright. At this time it can be very difficult and quite devastating for their families if they don't have insurance."

However, not everyone without insurance would have been affected by the quake.

"Quite a few of them might be alright."

The insurance industry was well-placed to cope with the impact of the disaster.

"I think the key thing will be being able to absorb the calls and the claims that are coming in," Mr Ryan said.

"The insurance industry is rushing a lot of people into the region now. They're diverting call centres from outside the region to take the calls, they're putting assessors into the Canterbury region to start working on the ground there - a lot of insurance staff are going into the area."

Those who are insured should not worry if they did not have a copy of their policy, as their insurer would be able to assist.

While not necessary, providing photos or documentation could speed up the claims process.

However, Mr Ryan asked people to be patient.

"Make your house secure but certainly don't start rebuilding it on a long-term basis until you've got the green light from your insurance company, because the key thing is that you rebuild your home to the building standard, not in a makeshift way that could potentially cause problems down the tracks."

Mr Ryan said the insurance industry would be able to absorb the costs from the quake.

Insurance companies themselves took out policies internationally through re-insurance, which provided catastrophe cover.

"This is a catastrophe, so the availability of money internationally is going to be there."

The key issue would be getting in enough materials and tradespeople to repair the damage, Mr Ryan said.

"The availability of bricks and timber and roofing materials and materials for roads - that will be a big challenge, and it is around the world when you get these large events," he said.

"I think over the longer term there will be real benefits for the Canterbury region, because with hundreds of millions of dollars being put into the region by the insurance sector, hopefully in the longer term people will see some benefits from a very dark period now."

- NZPA