Category Archives: Insurance

Covered – Episode 3

The third episode in the 12 part Covered series screened this week on Cue TV Tuesday, 8:30pm and  on CTV Wednesday, 8:30pm. You can also catch up on all videos at Rebuild Christchurch.

There has been mixed response to the series, some finding it helpful and others questioning whether it is too little too late. Perhaps it is and perhaps we have heard it all before. However, like In the Know, this series is trying to bring transparency to the many confusing processes a homeowner has to deal with as they settle their earthquake claim.

There is something of a sense of frustration though listening to recovery agency leaders explain things as if they are really so straightforward and consistent. I think we all know what is said at a management level and what is done operationally can be very different. But again like In the Know, use the information you are told to hold the agencies to account.

You will note that our very own Marcus Irvine is now putting the important questions to the engineer about repair methodologies. These questions come from what we hear from you – through In the Know, media platforms, emails and conversations in the community. However, if there is something very specific you think should be addressed in this series, the public have an opportunity to ask questions at Rebuild Christchurch which can be answered on air by EQC and other parties participating in sharing information.

IAG Executive General Manager for Canterbury Recovery Dean MacGregor talks about the IAG claims settlement process, why it can take over 60 weeks for a rebuild or major repair, how insurers work with EQC and dealing with complicated shared property and multi-unit building claims.

Reid Stiven, General Manager of the EQC Canterbury Home Repair Programme, talks about the Earthquake Commission Act and then structural engineer Tim Day looks at how to assess for earthquake damage and pre-existing damage.

CanCERN’s Marcus Irvine talks to geotechnical engineer Jordan Walker about house lifting to repair or replace foundations, what’s involved, when is ground improvement work needed and whether a house can withstand the rigours of being lifted.

The latest on Multi Unit Buildings (MUBs)

Another piece of information from EQC. MUBs people have been looking for clarity about how their repairs will be handled for a long time. Hopefully this approach will make progress happen and identify those people who are going to need additional support to make big decisions with neighbours.

Dependent MUB combos

Setting the scene

  • Among the most difficult building claims for EQC to settle are those relating to multi-unit buildings (MUBs).  MUBs are typically semi-detached and terraced houses which share common structural parts, such as foundations, party walls or a roof.
  • EQC has worked through 21,000 multi-unit buildings and has so far (end of July 2014) settled two thirds of them either by repairing or cash settling them. As for the remaining buildings, EQC has determined how they will be settled for almost all except the most complex ones.

What’s a ‘dependent MUB combo’?

  • Most dwellings in multi-unit buildings have different owners and often have separate insurers. Where the repair is confined to a single dwelling, or there is a common insurer such as in a body corporate, the path forward is relatively straightforward.
  • However, repairs are often required to shared structural elements in the building, such as foundations, external walls and roofs. This requires agreement between owners and insurers as repairs to individual dwellings cannot be done in isolation but are dependent on other dwellings in the building. We’re calling such MUBs ‘dependent MUB combos’.
  • And it is these approximately 80 MUBs, involving around 130 customers[1] that EQC is now working on to settle next. These claims are the most complex because:
    • Each dwelling is insured separately.
    • There is damage to the shared structural elements.
    • There is a combination of under and over cap claims and so agreement is required between all owners and insurers.
    • Some have pre-existing building issues (building design or construction features indicate an increased likelihood that other works may be required unrelated to the repair of the earthquake damage covered by EQC).

EQC’s settlement approach going forward for dependent MUB combos

  • Each multi-unit building that has a mixture of undercap and overcap dwellings and repair dependencies has its own complexities. So how such a building will be settled will be discussed with all owners and private insurers and agreed on a case by case basis as not every option will work for every building.
  • EQC is looking at three managed repair options for these MUBs:
    • A private insurer led managed repair through the Insurance Council of New Zealand’s  (ICNZ) Shared Property Project (SPP)
    • A private insurer led managed repair outside SPP (as the building hasn’t  been put into the SPP by the insurers)
    • An EQC facilitated managed repair if neither private insurer nor customer want to or are capable of managing the repairs.
  • A fourth option of cash settlement or customer managed repair is also available if all the owners and insurers in a MUB agree on this option. All parties have to be in an agreement because repairs to individual dwellings cannot be done in isolation and they have to consider how the damage to structural parts of the building will be repaired. For some of the MUB dependent combos with pre-existing building issues cash settlement might be the only option.
  • EQC believes a private insurer-led managed repair will in most cases be the most effective option as one insurer or their project management office manages the repair of the whole building. It is also the insurer who already has a vested interest in the repair of the building as they are already responsible for the repair of dwellings with overcap damage (more than $115,000 including GST).
  • Regardless of how the repair of a dependent MUB combo will end up being managed, EQC will work closely with the private insurer of the overcap dwelling(s) to confirm the repair dependency and agree on the scope of work, repair strategy and cost.
  • EQC will also be available to deal with any variations in scope and/or cost that may arise during the repair.

Completion timeframe

  • Considering that the best settlement approach for these MUBs will be decided together with the involved private insurers and customers on a case by case basis, it is not possible to determine the timeframe for when the repairs of these properties will be completed.
  • We know that the timing will be dependent on the private insurers’ timeframes which vary from insurer to insurer. So it is likely that the majority of these MUBs will not be repaired in 2014.

Support for EQC customers

  • EQC has special MUB claims managers working with private insurers and customers on the best settlement approach and repair strategy for individual properties. MUB claims managers will also work directly with private insurers or their project management office (PMO) if there are any variations in scope and/or costs during the repair.
  • In addition, vulnerable customers will continue to have case management support throughout the repair as required. In the meantime, we have checked that properties of vulnerable customers are safe, sanitary and secure while they’re waiting for the repairs.
  • EQC is also exploring how some other customer support groups, such as the Residential Advisory Service (RAS) and Earthquake Support Coordinators (ESC), could support our customers once we start discussing settlement approaches with them. We want to ensure they fully understand what it means for them and what their obligations are if they are an owner of a cross lease property.

EQC facilitated managed repair Pilot

  • EQC has been piloting an EQC facilitated managed repair where we contracted an insurer’s PMO to repair our customers’ dwellings at the same time as they are repairing the overcap dwellings. We have learnt that while such a managed repair is achievable, different factors that we need to take into account as a government entity have made this already complex pilot even more complex and difficult.
  • We believe that a more efficient and faster outcome for customers and all other parties can be achieved if EQC works closely with the lead insurer to confirm the repair approach and costs involved, and we then get our customer’s agreement for them to contract the lead insurer or their PMO to repair their property.

Help us find solutions for the stuck

CanCERN is hosting two small group focus group sessions on Monday 11 August (10.30am-12.00pm and 7.00pm-8.30pm) to unpack what has people stuck in the claims and repair/rebuild process, and what helps to ‘unstick’ them.  We would love to hear your ideas, so if you’d like to know more or join us please click on the link here.

We are currently planning a pilot with an insurer and your information will help us make the pilot a good one.

Here is a rough outline of the topics we will be covering.

  • Issues or blockages currently preventing claims from moving forward
  • The relationship with the insurer/Project Management Office?
  • specific examples of positive/negative experiences
  • the consequences/results of these experiences
  • Resident-centric customer service. What would help to make homeowners:
    • feel more confident about the process
    • be more trusting of the insurer
    • make a confident decision
    • make progress with the claim
    • understand the policy better
    • understand the claims process more clearly
  • Existing earthquake support services – what works and what doesn’t?
  • Using social media for support/progress

Insurance stats – June 2014

The CERA survey quarterly report is through and it is good to see there is greater detail about where people are sitting in the queue.

ICNZ is still holding firm to a finish date for most claims by the end of 2016. We are interested to hear where IAG sit within this time-frame as they have always expected to be finished by the end of 2015.  With the complications thrown up around land settlements, retaining walls and multi-unit buildings surely they will have to review that target.

There is no doubt that people have waited for what seems an eternity to get homes fixed and many will have to wait longer still but the figures are tracking well and according to plan and by the next quarter we will have officially passed the 50% mark. Let’s hope we make make quick progress from there.

You can read the ICNZ media release here.

icnz stats aug14

Insurance Council video interview

Some of you might be interested in a recent interview the Insurance Council’s CEO, Tim Grafton, did with CTV.

What’s talk about:

  • Declaratory judgement (0:00)
  • Insurability of IFV land (0:37)
  • Dodgy repairs – insurer liability (2:20)
  • Business interruption insurance (6:15)
  • Time frame for settling claims (7:53)
  • Are you satisfied with the job insurers have done? (8:30)
  • Key post-quake learnings for insurance industry (9:48)
  • Biggest insurance issues going forward (10:44)


Land damage and insurance policies

We always knew insurance policies would be rewritten after the Canterbury quakes and thankfully some people have learned a valuable lesson and actually read the small print before they consider signing.

One such fabulous resident has read her new policy and raised some very important questions about how much dwelling cover a person would actually have if they have identified land damage. Although the following wording relates to a VERO policy, other insurers may have similar wording so we have put these questions to the entire industry through Insurance Council NZ.

We are not entirely convinced that the implications of policy statements such as VERO’s below have been considered in light of the lack of answers to some of the land settlement questions. However, we believe it is fraught with difficulties to have such vague statements in a policy contract. Surely the insurance industry must also have learned that lesson.

The VERO policy says:

15. Unrepaired Land
This policy does not provide cover for loss caused or contributed to by land where you are aware that the land requires repair or poses a threat to the home. This policy will not cover loss caused or contributed to by the condition of the land where you, or a previous owner of the home, has received payment from the Earthquake Commission in order to effect repairs to the land, and those repairs have not been undertaken.

We believe that part of the problem with this kind of statement is the lack of definition. As it stands, the policy holder would have to trust the insurer’s interpretation of the statement and that is probably the other great lesson learned from the quakes – don’t assume you have the same interpretation.

The questions have been asked and we hope to facilitate greater clarity between the policy writers and EQC to ensure the statement is applied fairly.

  1. At what level of damage would it be deemed that land needed repair or posed a threat and who would tell the homeowner? What is the benchmark based on?
  2. Who makes the decision about what constitutes an appropriate and completed land repair?
  3. Will the insurer make any potential lack of cover more visible by asking specific questions and enabling the homeowner to make full disclosure of current situation at the time of taking up the policy?
  4. In the situation where a property is identified as Increased Liquefaction Vulnerability (ILV), a cash settlement is made but remediation is deemed not suitable (site issues, etc), how will the dwelling and out of scope cover be affected?
  5. What ‘remediation’ is expected regarding Increased Flood Vulnerability (IFV)?
  6. How will the cover be affected if you are one of those homeowners that repeatedly floods but will receive no cash settlement (not IFV)?
  7. Some people may not be told by the seller of a home if they had received a cash settlement from EQC for land remediation or the house could be on-sold multiple times before another event. How would the new homeowner in this circumstance be expected to know if they are therefore responsible to carry out land remediation at their own expense (no Deed of Assignment – DOA)? All documentation will be owned by the current owner unless it automatically goes onto the LIM and EQC cannot disclose that information to anyone other than the customer with the claim.
  8. ​Can we presume from the above statement that under this policy:
    a) cover will be provided for those whose payments have been made based on loss of value because settlement is not designated as payment for repair, or
    b) cover will not be provided if potential risk to the home is not mitigated against by lifting the property out of the flood zone regardless of foundation damage, and
    c) damage to a house on land identified as ILV but not repaired ​would not be covered?​
  9.  If EQC do settle ILV but the homeowner has already had bespoke foundations put in place so theoretically does not then need to remediate the land will they be covered for damage to the home?
  10. Are homeowners expected by insurers to repair damage to land that is not directly under the footprint of the home if it does not pose a direct risk to the house platform? What about garages and out of scope cover (paths, etc)?

Additional MBIE Guidance for Multi-unit Residential Buildings

MBIE has released technical guidance for multi-unit dwellings. The media release and links to guidance and information sheet can be read below.

Media release – 16 April 2014

The release of technical guidance for multi-unit dwellings means people living in flats or units can have confidence that the rebuild and repair solutions are technically sound and meet New Zealand Building Code requirements.

“The guidance provides a consistent approach to assessing, repairing or rebuilding multi-unit dwellings in Canterbury, but more importantly it gives robust and well-balanced engineering solutions that will reduce the risk of injury to people and damage to homes in future earthquakes,” says Mike Stannard, Chief Engineer, Ministry of Business, Innovation and Employment (MBIE).

The multi-unit building guidance forms a new section in MBIE’s existing main residential guidance document Repairing and rebuilding houses affected by the Canterbury earthquakes.

“Multi-unit buildings need to be considered differently to stand-alone houses because shared properties have added layers of complexity that require unique design solutions,” Mr Stannard says. The multi-unit guidance is for engineers and designers to complete repairs and rebuilds, but it will also help insurers, project management offices (PMOs), and loss adjustors to resolve multi-unit shared property claims.

The technical guidance applies to single and double-storied residential multi-unit buildings constructed together in a row that are on flat land in Canterbury. These properties are mainly in Christchurch City and Waimakariri District. Most of the shared properties in Canterbury are constructed like this. The guidance is most applicable to technical category 3 (TC3) properties because these properties sustained the most damage.

“Multi-unit buildings have shared building components, like walls and roofs, so the units need to be considered as a whole as well as individually,” Mr Stannard says. “They also have unique legal arrangements, like cross-leases and unit titles, which mean they can’t be approached in the same way as standalone houses.”

More than 200 designers, engineers, architects, insurers and insurance assessors have been trained on how to apply the guidance, including specific training for council consenting staff. There will also be ‘clinics’ for builders on how to construct acoustic firewalls.  “It’s important that all builders doing this type of work in Canterbury attend these clinics,” Mr Stannard says.

As with the main residential guidance, the multi-unit building solutions were developed over the past year by one of MBIE’s technical engineering advisory groups, with involvement and feedback from a wide range of practitioners.

An information sheet, jointly prepared by MBIE, CERA, Christchurch City Council, EQC, and ICNZ, is available for homeowners to help them better understand the repair/rebuild process of their unit or flat.

The guidance can be found here:

The information sheet can be found here:


Insurance and Savings Ombudsman

Yesterday I met with Chief Ombudsman Dame Beverley Wakem to discuss what the key insurance issues in Canterbury were from our perspective. She is meeting with a number of people and groups in the community.

This is not as easy to articulate as it may seem. Communication and communication channels are still an obvious issue but whether the delay of OIA information is still high on the priority list for residents is a bit of an unknown because people have stopped talking about it. Does this mean it is not longer an issue or have people just given up trying to use OIA to get the information they are entitled to? There are many topics like this – is it no longer an issue or have people given up or moved onto other issues?

One of the things we discussed was the issue of cash settlement – how are people who have accepted a cash settlement faring during the reinstatement of their homes? What rights did people have to say no to a cash settlement?  What happens when the cash settlement goes nowhere near the final reinstatement costs? What do the elderly do with a cash settlement? Who is helping and guiding in this space? Are EQC entitled to cash settle on the basis of an assessment which is two years old?

Another topic of discussion was ongoing insurance – can the insurer decline to insure repair work carried out? Can they refuse to cover repaired work if it fails in a future event? What repair documentation is an insurer going to want to see? If jack and pack and epoxy resin are good enough on the day, why are they not good enough to insure?

The problem with these topics is that the answers are not yet all known and are not likely to be tested until we have another event to put the question front and centre. That’s not really enough confidence for the homeowner who is paying for the insurance policy because if there is one thing we have learnt during this whole saga, it’s that the goalposts keep changing, the rules can be made up as each new issue arises and there is very little clarity about the hierarchy of important documents.

No small job but I did ask Dame Beverley if she could just sort this wee issue for us before the next event.




Rebuild Programme Progress Presentation

Yesterday CanCERN and Insurance Council New Zealand facilitated a session for a small group of community leaders to look in more detail at the Canterbury Insurance Rebuild Programme progress.

It was an interesting session and a good opportunity to ask some pertinent questions about the figures that have been collated by CERA. CERA releases the collated information quarterly. CERA is seen as an independent body which can report progress with some consistency.

One of the big outstanding questions is just how many claims are missing from the figures.  This report indicates 2600 but EQC Chief Executive Ian Simpson believes there are only 250.  Surely we could expect that by the next quarterly report CERA has identified exactly how many there are, who they will belong to and why in fact they have been unaccounted for.  Here’s hoping they are not our vulnerable people.

You can see by the presentation why some residents feel that insurers are on another planet. In terms of starting timeframes, we might as well be. Obviously the damaged or broken house began for people in September 2010 or February 2011. However, the insurer rebuild programme did not in fact start until halfway through 2012 so that is when they start tracking rebuild progress.

I don’t believe we will ever reconcile the two perspectives of just how long the repair and rebuilds have taken – the contexts are too different. I’m not even sure that particularly matters. What matters is how much longer it is going to take and the confidence and certainty people can get there is a plan in place to get them reinstated as quickly as possible.

The slide about media misinformation is an interesting one as the role of the media is a common topic amongst many of the forums I attend. Media don’t need to paint a ‘rose tinted’ picture of the rebuild but they do need to be accountable for reporting factual information. Misinformation causes people to have additional stress and sleepless nights and there is not a single person in Canterbury that needs that.

Thanks to ICNZ for presenting and responding to the questions and comments of community leaders.

The notes below relate to each of the ICNZ presentation slides. The pdf presentation can be viewed here.

Amounts paid slide
• End of Feb closer to 80% of commercial settled

Claims numbers slide
• 21, 962 relates to dwelling claims
• 2,680 undetermined whether under or over cap – waiting to be assigned to EQC or insurer
• Previous quarterly report showed 300.
• Insurers need to get on top of where those 2600 are and will they come to insurers

Total claims slide
• Claims settled means cash settled, rebuilt or purchased new home or repaired
• Pending or underway means the resolution has been agreed to but not yet reinstated or settled
• 3084 (14%) not finalised – either no decision made or no settlement yet offered or disputed

Recovery timeline slide
• Starting point for insurers second half of 2012 for the start of rebuild programme. The figures collated now show those jobs started during this period

Overcap dwelling claims slide
• 3084 – think many are waiting for land claim information, others are disputing and others have various reasons for not being able to accept a settlement yet
• How can insurers help get those people to be in a position to settle?

In resolution slide
• Consent tracking helps to drill into granular level of understanding what is coming through the pipeline

Completing ‘in resolution’ slide
• Timelines are subject to all sorts of variables – not all in insurer control
• Builders reported they built 6000 homes last year and insurer only account for 1500 of those
• This year builders think they can build 7000 homes, a large portion of which will be insurers
• What about the 2600 insurers didn’t know about?
• What about the 3000 undecided who are not yet scheduled into the projected timelines?
• There is the potential that rebuild programmes could get pushed out by a year based on unscheduled figures
• If the build resource is still available …

ICNZ Facilitation role slide
• Insurers and ICNZ are frustrated about roadblocks too
• Weekly meetings with CEOs to see what needs to be done, what is inhibiting progress
• GMs meetings – monthly or as required
• Steering groups are to try to understand the complexity so insurers can plan and address issues – collaborative information sharing
• High level communications steering group established to insure all agencies get a heads up about upcoming information releases so that all agencies can be prepared to respond to customers with good information

Q – What constitutes contaminated land?
A – HAIL register – Environment Canterbury holds it and it records activity that means soil testing has to occur

Q – Where can we get individual insurer rebuild figures?
A – Most insurers report on their own website. The CERA released figures are based on aggregated data collated by insurer so they don’t tell the individual story. The aggregated figures don’t really demonstrate what the individuals are doing because of the different market share and the different ways insurers settle (predominantly cash settling or not). For example, IAG and SR have about 31-32% of residential rebuild market, VERO has 18%, Lumley and Tower have 8% and MAS have 2-3%.

Q – Why can’t insurers just take the 2600 claims and deal with EQC later?
A – EQC has to hand it over to insurers first.

Q – Will insurers do a joint review if they disagree with EQC?
A – EQC has to agree to a joint review.

Q – How did CERA get the figure of 2638 undecided?
A – It is the gap between insurer reported numbers and EQC reported numbers.