The four years since the Christchurch earthquake is more than enough time for a discussion about New Zealand's system of disaster insurance. The system might charitably be called a public-private partnership - the state's Earthquake Commission pays up to $100,000 for damage caused by natural disasters, private insurance covers costs above that sum. But as many insured households in Christchurch discovered, it's not much of a partnership in practice.
They had to make separate claims to the commission (EQC) and their private insurance company and the response was not always harmonious. Many heard from one agency that their house needed replacement and from the other that it could be repaired. Until they could get the public and private insurers to agree, nothing could be done. Since the EQC paid out readily on claims under $100,000, the least serious damage in Christchurch tended to be repaired reasonably quickly while households needing more extensive work suffered confusion and frustration.
Last week one of the private insurers, Vero, called for a more efficient system of dealing with claims. Issuing a report on its experience, it questioned whether both an insurance company and EQC should be dealing directly with claimants.
The Government has had this and other elements of its disaster insurance under review since September, 2012. The Treasury's review was expected to lead to a Cabinet decision in mid-2013 but the insurance industry is still waiting. Two weeks ago, Earthquake Recovery Minister Gerry Brownlee said he expected to see the report in the next month or two but he indicated the Government was unlikely to make more than minor changes.
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The EQC system was "reasonably sound", he believed. "We have been encouraged by the willingness of reinsurers to reinvest in the EQC programme." Since its disaster fund was exhausted by the long sequence of earthquakes around Christchurch, five of them creating new insurance claims, it is a relief that international underwriters have returned. But the service to insured households still needs attention.
Private insurers such as Vero want to retain dual claims management yet none of them want to cover hazards on the scale of earthquakes and floods. But the company believes customers would be better served, or at least less confused, if their private insurer dealt with the EQC on their behalf. That would be more in tune with the way customers are charged as the disaster fund comes from a levy on private household insurance.
But the EQC questions whether private companies would have had the capacity to handle the number of claims in Christchurch that were under the EQC cap.
A Vero executive concedes companies would need some sort of state support to handle the rush. The commission dealt with most claims quickly and generously in Christchurch but too many of the more serious cases languished between the cracks of public and private insurance for too long.