EQC sees the need for a big shakeup

Ian Simpson, EQC chief executive. Photo / Bay of Plenty Times

Scale and complexity of the Canterbury earthquakes raised challenges: chief.

The Government's earthquake authority has welcomed an insurer's call for a system overhaul after the Canterbury earthquakes.

Ian Simpson, EQC chief executive, said his organisation had also called for changes in its annual reports and he backed reforms in the Deloitte Access Economics' report, Four Years On: Insurance and the Canterbury Earthquakes, released by Vero.

Simpson said Vero's call for change reiterated the revisions and improvements EQC sought to the scheme and insurance response in its annual reports.

He welcomed a call for discussion on New Zealand's natural disaster insurance model, using lessons from the 2010 and 2011 Canterbury earthquakes.

The Vero report referred to "vexation" expressed by policyholders on the length of time taken to settle claims and repair properties and said Vero shared those sentiments.

Simpson said he acknowledged the many challenges thrown up by the scale and complexity of the Canterbury earthquakes.

But Vero also took a swipe at EQC, which covers all land (private insurers don't cover that), up to the first $100,000 on a house and up to the first $20,000 of contents.

Jimmy Higgins, Vero executive general manager of claims, said the inefficiency of a dual claims management model had a significant impact on timely resolution of claims for customers, and it was crucial to get this right for the future.

The dual claims system means private insurers such as Vero are forced to work with EQC.

Higgins said many insurers, including Vero, had worked hard to compensate for inefficiencies in the operation of the natural disaster insurance mode.

Simpson said change was needed. However, his organisation took the lion's share of the claims work and had resolved most of it.

"Any opportunity to review how the insurance industry responded in Canterbury and what we could do to improve customers' experience is well worth it," Simpson said.

"Under the current arrangement, EQC is managing 85 per cent of the domestic property claims arising from the Canterbury earthquakes, while private insurers handle just 15 per cent of them.

"Were private insurers to lead on all claims, they would have had to complete six times more assessments than they are doing at the moment. We are talking to insurers regularly on how we better share this load and get better customer certainty and service," he said.

"We have also been looking at our own lessons learned and are implementing recommendations made by an independent review we sought on how we interact with our customers."

Other lessons being considered included changes to EQC's stable "business as usual" structure to improve readiness for a future event.

EQC - Canterbury Home Repairs

• 68,652 homes in programme.
• 64,973 completed home repairs by February 13.
• 167,946 properties with a building claim.
• 186,807 contents claims.
• 148,901 land claims.

[Source: EQC]