Southern Response is delivering a "shock" to 50 claimants.
Chief executive Peter Rose said 50 homes had been recently moved into the repair queue instead of a rebuild as originally assessed. That would save the company $5 million.
It was the choice of the insurer whether or not a house was repairable.
He admitted "shock" would probably be the initial reaction of these customers. Some of the changes in queues had arisen during talks between Southern Response and EQC, with customers just being informed now with a further scope of work to be done.
"Our policy there is that we only ever review the situation if there's been some external intervention, and that's usually if the EQC and ourselves have got a disagreement in terms of repair methodology."
Rose said not all customers would be satisfied with this decision, with a few already informed. As a rule of thumb if the insurer judged the repair cost to be above 70 per cent to 80 per cent of the total rebuild, then it would go ahead with a rebuild. A disproportionate number of these owners were on the hill suburbs.
*An earlier version of this story incorrectly stated Southern Response would save $20 to $30 million.
- The Press
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