Recovery not just an 'insurance issue'
People waiting for quake repairs to their home are owed an explanation of why it is taking so long, writes TIM GRAFTON, chief executive of the Insurance Council.
The recent big flood was yet another cruel set-back to the recovery for those with homes that were awash.
If there was any silver lining to the cloud that hung over the city, it was that real urgency was brought by central and local government to fixing the causes of frequent flooding - land sunk by the quakes and lateral spread narrowing creeks.
This response, more than anything in recent times, illustrated that recovery in Christchurch has never been and never will be solely an insurance issue.
Recovery progress is a matter for all stakeholders - EQC, central government, local government, insurers and state-owned claims manager Southern Response.
People waiting for their recovery 3 1/2 years after the first quake are owed an explanation as to why it is taking this long and should be helped to understand the very real complexities.
What are unhelpful are headline writers' portrayal of insurers' response to disaster as being rated "the worst in the world".
That's how a recent Marsh report comparing New Zealand's response to the earthquakes in Chile (2010) and Japan (2011) was reported by some media. However, rather than rubbish insurers' efforts here, Marsh had pointed out the significant differences between the three countries.
Unlike Chile, where insurance penetration was only 30 per cent of losses, commercial settlements in Canterbury were significantly delayed by the CBD cordon which was only fully lifted in June 2013. Despite this, at the end of February 2013 close to 80 per cent of commercial claims were settled, with well over $7 billion paid out, including $1b in business interruption insurance.
Unlike Japan, where only 17 per cent of the population get catastrophe insurance cover and then only up to a maximum of 50 per cent of their home's value, 99 per cent of Christchurch homes were covered for the full rebuild costs.
One hundred thousand Japanese still have no homes and only 3 per cent of planned public housing has been built. Here, three years on, 9119 (42 per cent) of over-cap dwelling claims in Canterbury are completed and fully settled, with a further 9759 (46 per cent) over cap dwelling claims in the design-build pipeline or pending cash settlement.
Some commentators believe insurers can't possibly complete some 8500 rebuilds and repairs by the end of 2016 but given the construction industry is projecting that 7000 homes will be built in Canterbury this year alone, building 2800 dwellings a year would seem achievable.
However, the pace at which these repairs and rebuilds move through the building pipeline is largely outside the control of insurers while complicated issues remain. For example, central and local government are working on better ways of speeding up the consenting queue.
In the Port Hills, the city council has started communications on tackling the retaining wall problem where house A cannot get a consent because a retaining wall on House B's property or the council's land needs fixing first. The council is also getting more analysis on mass land movement areas in the Port Hills which will give repair-rebuild programmes more certainty.
In terms of land damage, we're also pretty much unique in the world in having the state insure land where there have been improvements. This followed the 1979 Abbotsford disaster when a landslip got rid of the land, so EQC cover came in to compensate for land loss.
The Earthquake Commission is currently challenged with finding solutions to badly damaged land that is more vulnerable to liquefaction now than before the quakes and also with land that is more vulnerable to flooding. EQC will need to show their solutions for land, and that the compensation they will pay landowners, stack up.
That in turn can impact on homeowners' decisions and the pace of recovery.
Many of the 2608 (12 per cent) over-cap dwelling claims where insureds are undecided about their insurance offer are awaiting their EQC land settlements before making decisions.
Insurers and EQC have worked together to tackle how to settle multi-unit cross-lease properties with shared walls and ceilings - units that are connected but with different insurers, different policies, some uninsureds and a mix of under and over cap. We've now got ways of managing these claims, but they will require an equally challenging set of solutions for consenting authorities and for central government if 100 per cent agreement cannot be achieved amongst property owners.
The Ministry of Business, Innovation and Employment will introduce new building guidelines for residential multi-units at the end of March and continues to develop new building guides to support the dynamic rebuild effort.
Environment Canterbury and the Ministry for the Environment are looking to report in April on the list of sites that may have once hosted hazardous activities and industries.
We understand that some people require independent advice to challenge or be reassured about the offer from their insurer.
For this reason, the industry supported the establishment of the Residential Advisory Service, drawing on community experts that can help people find another source of independent advice.
These are just some of the challenges multiple agencies are working together on, issues that will irrefutably affect the pace of recovery.
Finally, let's finish with that flood. Most people know of homes in flood zone areas that were damaged by the quakes that are repairable.
Where there has been significant damage to foundations as a result of the earthquake, some properties are jacked up, the foundation repairs carried out and the property laid down on top again.
Where this happens insurers take the sensible course at their own additional expense and repair the foundations to a new minimum floor level that keeps the house above the risk of flooding in all but the most extreme events.
But where there is no damage to foundations that won't happen because there is no insurance liability to lift the house.
Yet it makes sense to everyone to lift the house to avoid future flooding unless flood risk can be reduced by other means, for example, local or central government building infrastructure to prevent flood.
There are many other complexities that can't be covered in the limits of one article. But if there is one clear message, recovery progress is a matter for everyone. Finding a convenient scapegoat to get a headline gets us nowhere.