Quake damage estimate disputed

Last updated 17:05 24/07/2013
BNZ building

BAD STATE: The dealing room in BNZ's Harbour Quay building following last month's quake. The building will remain closed for six to eight weeks.

Abseiling workers Featherston St
CRAIG SIMCOX/Fairfax NZ
CHIPPING AWAY: A pair of abseiling workers work on a Featherston St building today. Some masonry fell from the building during Sunday's earthquake.

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The insurance bill of Sunday night's quake remains unknown despite a Credit Suisse report stating the cost would be well below US$1 billion ($1.3 billion), the Insurance Council of New Zealand says.

Insurance manager John Lucas said he did not know how the financial services firm had reached the figure. He expected the Insurance Council would know the cost in about a week.

"It's probably based on a model answer, but that doesn't mean it's necessarily the right answer."

Credit Suisse, reporting on the potential for impact to one of its funds, estimated the damage would be about 10 per cent of that from the Canterbury quakes, suggesting a loss of under US$1b, according to risk-related financing blog Artemis.

"The NZ earthquake had a higher magnitude than the Christchurch earthquake from 2011 but ground acceleration was significantly lower, meaning that damage can be expected to be much lower."

Sunday's magnitude 6.5 earthquake, centred in Cook Strait, released energy equivalent to 100 nuclear bombs of the size which devastated Hiroshima, scientists said. Aftershocks continued to rattle central New Zealand this week.

Damage in Wellington has been limited largely to burst pipes, some internal damage to buildings and superficial structural damage. Cordons were still up in Featherston St today because of the dangers of loose masonry and glass.

The Marlborough town of Seddon was also affected by the quake, with cracks opening up in a dam built on Starborough Creek which flows through the township about 15km away. The dam held 250,000 tonnes of water, being slowly released under an emergency action plan, and was not considered a threat to people living below.

Out of the 2500 buildings in Wellington's CBD, much of the area on reclaimed land, 35 were found to have external damage.

Three parking buildings remained shut down after the quake, with owners unable to remove their cars, and the BNZ Building will be closed for six to eight weeks.

In a post on the bank's Facebook page, chief executive Andrew Thorburn said building owners Centreport and BNZ had engineers assess the building.

The inspection found it was structurally sound but had taken extensive water damage due to burst pipes and sprinkers, Thorburn said.

"Now we've been in, initial assessments suggest it could be at least six to eight weeks to make the necessary repairs to the fit out of the building. Obviously, there is more planning to be done to finalise exact time frames and we'll keep you informed as we know more."

Staff had been able to go inside to remove equipment and services were able to run as normal without the building, he said.

Earthquake damage has also forced a government agency out of its heritage-listed central Welllington building, and driven the Greater Wellington Regional Council to speed up its relocation plans.

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Creative New Zealand left its offices in the 1909 Old Public Trust Building in Stout St yesterday and says it will not return.

The property market was also expected to become a casualty of Sunday's earthquake as insurers and home buyers tread more cautiously.

Buyers in the Wellington and Marlborough regions are being advised to consider delaying their purchases or to ensure the final sale agreements are subject to obtaining insurance.

Massey University senior lecturer in insurance and finance Michael Naylor said prospective buyers should pause for a while.

"If I was buying homes, I would delay things until they can buy insurance. You can't expect the insurance companies at this stage to take on new clients."

Insurance Council of New Zealand operations manager Terry Jordan said some of its 27 members - including AA Insurance, State, NZI and AMI - were not taking on new business in the centre of the country as they assessed quake damage and risk.

However, insurers have said they are open to compromise to ensure the property market does not "grind to a halt".

Even if earthquake activity eased, the standoff could last for weeks, and could stretch to several months, Jordan said. "There's no measure on this, unfortunately."

Harcourts New Zealand chief executive Hayden Duncan said demand did not appear to have been affected, but Sunday's quake was likely to lengthen the sales process.

One method adopted in Christchurch, and largely accepted by insurers, involved buyers taking over the insurance policies of the vendors. While insurers were reluctant to take on new policies, they could generally replace them and maintain the same level of risk.

- The Dominion Post

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