EQC claims management criticised

EQC's handling of earthquake claims has been unreliable and fragmented, an internal report says.

Reports released under the Official Information Act show the Earthquake Commission hired consultancy firm LSI in June to review its claims management amid growing scrutiny from Government ministers and the Treasury over its response to the February 22 Canterbury quake.

LSI found the commission had no overarching system for managing claims, and many staff did not trust information supplied from other parts of the organisation.

Contradictory information on claims was often "siloed" within different departments and its reliability never tested, the report says.

"EQC has identified significant gaps in its ability to measure the performance of its main function – claims management."

The LSI report surfaces as the commission faces criticism over its handling of claims, the Fletcher Construction-managed repair scheme and controversial recruitment decisions.

It was reported yesterday that the commission had received about 400 complaints on work done under the Fletcher scheme, which is repairing tens of thousands of quake-damaged homes.

It was revealed last month that several close family members of senior EQC managers had secured lucrative jobs as assessors in the Christchurch field office, leading to accusations of "jobs for the boys and girls".

The EQC is now reviewing its recruitment for this year, which includes plans to drastically cut field staff, but it has refused to scrutinise previous appointments.

Complaints about poor claims management have plagued the commission since the September 2010 quake and include accusations of lost claims, cheques sent to the wrong address and long, unexplained delays.

The LSI report said that while the commission's statement of intent had clear objectives and measures for handling claims, these appeared to have no bearing on how the organisation was run.

To overcome these shortcomings, LSI recommended a central "business information unit" as a reliable conduit for all information to reconcile the fragmented reporting.

In a statement, EQC acting chief executive Hugh Cowan said the LSI report was still being considered. He declined to comment on whether any of the failures had been fixed.

"EQC acknowledges that the accuracy of our claims settlement process will continue to be a focus. As such, we have recognised that a more robust claims reporting process is needed," he said.

The EQC has been collecting money from New Zealanders to cover natural disasters for 65 years and one of its major roles has been preparing for a large-scale event, such as an earthquake.

Even before the September 2010 quake, the commission had reports arguing it was poorly prepared for a major disaster.

It has received more than 400,000 claims since September 4, 2010, which it expects to cost more than $11 billion, offset by $4.5b in reinsurance.

The September 2010 and February 22 quakes are among the five most expensive in terms of insured loss worldwide.

The Press