Hon Megan Woods
Minister responsible for the Earthquake Commission

MEDIA STATEMENT

29 October 2018

Crown fulfils obligation to provide funding buffer for EQC

The Earthquake Commission will receive the first payment under the Crown Guarantee on 1 November 2018 so they can continue meeting the costs of repairing damage caused by natural disasters, says Megan Woods, Minister Responsible for EQC.

This is the first time the Crown Guarantee has had to be used. EQC will be provided with $50 million to help meet operating costs.

“As the Government has long expected the Natural Disaster Fund, which covers EQC’s operations, has been depleted following the Canterbury and Kaikōura earthquakes.

“This has happened earlier than originally forecast – the result of a combination of faster than expected settlement of claims, EQC’s land settlement with LINZ being finalised earlier than expected, as well as reinsurance payments being due.

“The payment to EQC is an operating grant and provides additional financial support to EQC alongside the Natural Disaster Fund and EQC’s reinsurance programme. It provides a buffer so EQC can continue to pay claimants.

“It’s important that EQC claimants know that Crown is standing behind EQC and can have confidence their claims will be sorted. EQC will continue to operate as normal.

“The need for this funding has been known for some time and the Government has budgeted accordingly. Contingency funding was set aside within Budget 2018.

“The latest cash flow forecasts indicate that EQC may need Crown funding of less than $100m (including this first payment) over the remainder of the year ending to June 2019. It is estimated further Crown funding of around $170m may be required in 2019/20.

“It’s not yet possible to say with certainty what the total Crown funding requirements for EQC will be. There are inherent uncertainties when estimating the outstanding claims liabilities from the Canterbury and Kaikōura earthquakes. Estimates will continue to adjust as new information comes to light regarding the inflow of new remedial claims, litigation outcomes and other factors.

“Despite the need for the guarantee, I am hearted to see continued signs of increased momentum and performance at EQC following the report of the Independent Ministerial Advisor I appointed earlier in the year.

“Of the 3600 open claims EQC had on hand in May, 60% have now been resolved and the average number of claims resolved per week has increased by 31%. There are still more to do to ensure all Cantabrians have their claims resolved and can move on with their lives, but things are moving in the right direction,” says Megan Woods.

The Crown Guarantee has been in place since 1944 as part of the risk management arrangement between the Crown and EQC. EQC has paid $300m over the last 25 years to the Crown for the guarantee.

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