Insurance Industry indicates support over roadblocks

MEDIA RELEASE

July 26 2012

Insurance Industry indicates support for Minister being committed to clearing roadblocks.

The Insurance Council says the Minister for Earthquake Recovery’s indication to remove further roadblocks for insurers is a positive move.

The release of flood data is now required to ensure this continuing threat to the Canterbury region is removed or at least understood.

Insurance CEO’s have been meeting weekly with CERA, EQC and government departments including the Minister’s own officals since March to speed up the recovery and obtain the information needed to settle claims.

Insurers are paying out and completing insurance claims for commercial customers at more than twice the rate of residential claims due to lack of flood and land data and EQC issues.

Nearly half of all Commercial insurance claims for Christchurch have been paid out to customers and settled, says the Insurance Council.

However difficulty obtaining land data and EQC decisions has seen slower residential payments where just over 20 percent have been paid.

EQC is the only insurer in the world that insures land and this issue is enormously difficult for them. In addition EQC is still working through the issue of apportionment and that also makes their decision making more complex and harder to resolve.

EQC is facing an enormous and unprecedented task under huge pressure from the public, government and insurers and re-insurers to get things right.

This is affecting the Insurance Industry in the residential zone and slowing their ability to respond.

Together the Christchurch residential and commercial insurance claims for earthquake damage now paid out total more than $NZ 4.4 billion dollars.

To the end of June 2012, 110,053 residential insurance claims totalling $NZ 1,339,768,000 and representing 21 percent of all residential claims have been settled by private insurers, the Insurance Council says.

For the same end of June period, private insurers had paid out $NZ 3,135,360,000 for commercial property claims as a result of the September 2010 and February 2011 earthquakes. This represents about 45 percent of all commercial property claims for Canterbury.

The combined residential and commercial end of June figures from private insurers totalled nearly four and a half billion dollars ($NZ 4,475,128,000).

Insurance Council Chief Executive, Chris Ryan, says the figures indicate the private insurance industry is making steady progress despite suggestions the industry is going too slow.

While the Insurance Council acknowledges the frustration of Cantabrians; insurers and brokers are also frustrated with the huge task of assessing and completing claims and want to see them completed as soon as possible.

Progress settling earthquake-related insurance claims; particularly residential claims, continue to face difficulties associated with obtaining accurate land data as well as the sheer number of individual claims private insurers are dealing with.

The Canterbury earthquakes are recognised internationally as one of the largest and most complex insured loss events in history which inevitably impacted on the speed of the claims settlement process.

Insurers acknowledge there is a long way to go before all insurance claims are settled. Ongoing issues such as land remediation and the apportionment of costs for the different earthquake events continue to frustrate progress but insurers are working around the clock with the Earthquake Commission (EQC), the Canterbury Earthquake Recovery Authority (CERA) and other government agencies to resolve these.

Where insurance claims are straightforward, insurers will cash settle with the claimant quickly to ensure that businesses and homeowners are able to get back to normal, or to allow the payouts to be invested in a positive future, including keeping businesses operating and staff in jobs.

The Insurance Council says earthquake insurance cover continues to be available for the majority of Cantabrians. Difficulties arise for some people who are moving into the region and wishing to take up insurance. Solutions are available for those people. Insurers are agreeing to insure people on properties that are already insured, but may require some data about the condition of the land under those properties.

The Insurance Council says payouts from private insurers totalling more than $NZ 4.4 billion dollars are the forerunner of what is expected to be a $15 billion dollar private insurance payout for the Canterbury economy by the time the Christchurch rebuild programme is completed.

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