Earthquake losses could run to $4.94b

By Jonathan Underhill

The Event Cinemas and Queensgate Shopping Centre in Lower Hutt, cordoned as a result of the November 14 earthquake. Photo / Mark Mitchell
The Event Cinemas and Queensgate Shopping Centre in Lower Hutt, cordoned as a result of the November 14 earthquake. Photo / Mark Mitchell

The insured losses from the Kaikoura earthquake could run to US$3.5 billion, with at least half of that incurred in Wellington and up to 30 percent in Canterbury, according to an early estimate by a US-based catastrophe modelling firm.

AIR Worldwide released its estimate, which doesn't include uninsured damage, just days after the November 14 quake, which at magnitude 7.8 was one of the four most powerful to strike New Zealand since 1855. Some 27 buildings in Wellington city are classified as being at risk, including three the city council is demolishing and government buildings that have been condemned.

"Much of the central business district and waterfront of New Zealand's capital is underlain by soft sediments, which amplify ground shaking," said the release from AIR, which is a unit of New Jersey-based Verisk Analytics. While Wellington initially appeared to have survived relatively unscathed, building inspections had shown up the extent of the damage, it said.

Today the government extended its employee support subsidy for quake-affected businesses in the Kaikoura area to some specific businesses in the Wellington region and said the $7.5m allocated could be extended.

"At this stage we expect the package to apply to around a dozen businesses on Molesworth St, 15-20 businesses in Tory Street, and a larger number of businesses in and around the Queensgate Mall in Lower Hutt," said Steven Joyce, economic development minister. The subsidy is $500 gross for a full-time worker or $300 gross part-time a week for eight weeks, a maximum of $4,00 and $2,400 respectively.

Among the Wellington businesses affected by the quake, Centreport lost virtually all its container operations, disrupting its 130,000 TEU-a-year business during the peak October-to-March period, with its two gantry cranes and container berth out of action. Chairman Lachie Johnstone told Radio NZ's Nine-to-Noon programme there were "demerged piles and they have fractured".

The port company, which is 77 percent owned by Wellington Regional Council and 23 percent by Horizon Regional Council, will welcome a container vessel tomorrow but it will be equipped with its own crane for unloading, as are a handful of vessels in most global container fleets, and will dock elsewhere. It was too early to put a cost on the damage, Johnstone said. Its cruise terminal has been abandoned, with passengers now bussed straight into the CBD.

"We're well insured" with a combination of insurance for the infrastructure and business interruption, he said. Asked by RNZ how high the cost of business interruption could be, he said: "We don't know. But we do know we're well covered for a number of years."

The port company is hoping to gain fast-track resource consents for any work it undertakes. The scope of the work could be significant, with Johnstone saying while it was too early to say what the port will end up looking like, it would look "different". It estimates freight over its wharves amounts to a $2.5b contribution to New Zealand's gross domestic product.

"We're definitely a sustainable long-term option. We're going to have to reassess how we do business," he said.

Wellington-based insurance risk consultant John Sloan said the Kaikoura quake is likely to dredge up some of the same issues for insurance cover as were evident after the two Canterbury quakes, even though issues such as the extent of commercial insurance and EQC cover had been clarified.

"Many problem areas will still arise in the wake of the Kaikoura earthquake which also had a significant impact on Wellington commercial properties," Sloan said in a note. One such issue was in self-insured claims deductibles which run at about 5 percent in the Wellington region. That meant the claimant must bear the first $1 million of a site insured value of $20m.

"It is likely these claims deductibles could rule out many claims that fall below the threshold," Sloan said.

- BusinessDesk

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2016, NZME. Publishing Limited

Assembled by: (static) on production bpcf03 at 09 Dec 2016 06:16:56 Processing Time: 247ms