C'mon EQC, explain apportionment

05:23, May 11 2012

Last September, the Earthquake Commission cut me a cheque for about $112,000 for the over-cap damage to my Mount Pleasant home. Then somebody intervened, cancelled the cheque and here I am eight months later, still waiting for payment.

I'm caught in the dreaded apportionment trap, where EQC divines which earthquake caused what damage and then draws on different insurance and reinsurance schemes to pay for repairs.

EQC has done a lousy job explaining how apportionment works in practice, why it's so difficult and why it's taking so long. The state-owned insurance owes its customers far better information than provided so far. Front up, EQC.

To date, the company has published largely identical (and weak) explanations of apportionment on its website, Facebook pages and in reports to Parliament.

All have included, for example, this baffling statement: "Bear in mind that apportionment will not involve allocating specific damage to an event (e.g. broken tiles in the kitchen to the 22 February event). Instead it involves allocating a proportion of the total damage value to each event."

Call me thick, but how does EQC decide what proportion of total damage can be allocated to which earthquake without knowing what specific damage was caused by each earthquake? Doesn't it need to know that the granite bench top in the kitchen cracked in February and the plywood bench in the study was slightly damaged in June in order allocate (apportion!) the cost to February or June?

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Replacing the granite bench will cost thousands; fixing the ply bench requires glue and three screws and about 10 minutes. If you're in the reinsurance business, you want to fix the ply bench and stick some other sucker with the granite replacement.

But no. EQC allocates a "proportion of the total damage value to each event". But how?

"EQC uses a variety of methods to establish how damage should be apportioned,'' EQC says on its website, especially when it didn't inspect after each quake. ''This includes asking the homeowner or insurer for details of which damage occurred following each event, and looking at apportionment of damage in other similar properties in the area."

This doesn't seem overly complex, but I was told this week by an EQC staffer that each apportionment takes 3-4 hours. In mid-April, EQC announced it was seeking an ''automated process'' to ease the ''very manual'' burden.
''We're not talking years, we're not talking a year, but I don't want to give you a time frame," said EQC Canterbury events manager Reid Stiven (pictured).

Bearing in mind, the High Court ordered apportionment in September 2011, this looks damningly slow.

But who knows? It might be reasonable if EQC shared with Cantabrians more information about apportionment: How it works, why it's hard, how many staff are working the project, how many apportionment claims have been settled/outstanding, which insurance companies are helping/hindering the project? Give examples. Invent a hypothetical home to illustrate the process. The list goes on.

Press quake reporter Michael Wright this week reported well on the complexities of new foundations for TC3 properties. Give him a call.

UPDATE: The EQC has responded to this blog via its Facebook page. See their response here.

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