Chch insurers among world's slowest

CECILE MEIER
Last updated 12:34 20/02/2014

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Christchurch Earthquake 2011

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Insurance companies in the Christchurch market have been rated among the world's slowest to respond to disaster.

Global insurance broker and risk management company Marsh published a report this week, which looks at how the insurance industry performed in the aftermath of three of the most expensive insured earthquakes in history.

Between February 2010 and March 2011, major earthquakes struck Chile, Japan and New Zealand, resulting in an estimated total insured loss of about US$60 billion (NZ$72b).

Marsh analysed the commercial claims from its clients in the three countries for the report.

Marsh dealt with 2500 commercial claims, 19 per cent of an estimated total of 13,000 commercial claims in Christchurch.

The total value of Marsh's clients' claims was about US$1.75b, 31 per cent of an estimated total value of commercial claims of US$ 5.6b.

Marsh's clients included the hospital, the university, manufacturers, retail stores, and property owners in the CBD.

As a broker, Marsh works with all insurance companies in New Zealand. For Christchurch's contracts, it worked mainly with NZI, QBE, Vero and Lumley.

Most claims filed by Marsh clients in Chile were settled within 12 months, and the majority within 18 months in Japan.

Progress was much slower in New Zealand, with 16 per cent of claims closed after 12 months, and 32 per cent after 18 months.

Three years on, there are still many outstanding claims, the report says.

''The scale of the event [in New Zealand] was larger than the country's loss-adjusting, engineering, and insurance industries were equipped to deal with, delaying the settlement of a significant percentage of claims,'' the report states.

The report says New Zealand was ''the least prepared of all from an insurance perspective''. 

''Christchurch had not been regarded as a high-risk earthquake zone, and, as a consequence, people were underprepared for the February 2011 earthquake.''

Japan is often associated with earthquake risk, but even with its prior experience, the nation was not prepared fully for the multiple impacts of earthquake, tsunami, and radioactive contamination.

However, 90 per cent of the claims were reported within the first six weeks, the report shows.

Chile achieved the quickest claim settlement rate, but the country did not experience the same degree of urban impact and restriction zones as New Zealand or Japan, the report says.

Most claims were also reported within one week of the 2010 Chilean earthquake.

In New Zealand, it took four months for 80 per cent of claims to be reported.

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The reports puts New Zealand's slow progress down to the closure of the central business district following the quakes, ongoing aftershocks, and practical difficulties in assessing the scope and nature of damage.

On a more positive note, the report notes the ingenuity of Kiwi businesses affected by the quakes.'

'Many businesses . . . took temporary premises and their businesses worked through or around problems," it said.

"Landlords with properties affected in the CBD generally took a negotiated settlement on their property damage and loss of rents claims, and probably invested the money elsewhere.

"In general, clients appear to have been very resourceful in how they restarted their businesses and the locations from where they worked.''

- The Press

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