Private Insurers Pay Out $14 Billion in Quake Claims

Private Insurers Pay Out $14 Billion Settling Canterbury Earthquake Claims

Private insurers have paid out almost $14 billion in settling Canterbury earthquake claims, with more than 80% of all Canterbury earthquake commercial and out of scope claims completely settled.

The Insurance Council of New Zealand announced today that at the end of December 2014, $8.17 billion had been paid to settle commercial claims and $5.69 billion for domestic claims resulting from the Canterbury earthquakes in 2010 and 2011.

“This is a significant contribution towards the estimated $40 billion economic loss suffered in Canterbury, which has allowed business and households to recover and rebuild almost four years after the tragic February 2011 earthquake,” says Insurance Council Chief Executive Tim Grafton.

It’s estimated that 83% of all commercial claims are now settled.

Based on statistics from a quarterly survey of insurers conducted by the Canterbury Earthquake Recovery Authority (CERA), 84% or 53,698 of all ‘out of scope’ claims, such as pathways, driveways and fences, had been settled at the end of 2014.

The survey indicates that for residential dwellings, 57% or 13,566 of claims above the Earthquake Commission (EQC) cap of $100,000 plus gst (known as over cap claims) have been fully settled.

However, a further 36% or 8,594 over cap claims have been agreed between the customer and insurer and are either under construction, in the rebuild-repair queue or about to be cash settled - confirming that 93% of all over cap claims are settled, resolved or in resolution.

Of the 13,566 over cap claims settled, 10,676 have been cash settled and 2,890 were completed rebuilds and repairs. Cash settlement is a choice people make when they want to manage their own repairs or rebuild and may include purchasing another property.

“We expected a substantial ramp up in over cap settlements in 2014 and this was evidenced by private insurers settling about 1,100 over cap claims each quarter which is a 50% increase on the quarterly rate from the previous year,” says Mr Grafton.

In 2014, private insurers settled 4,447 over cap claims but were also transferred a further 1,963 over cap claims from the EQC, taking the total number of over cap claims to 23,925, up from 23,181 at the end of September 2014.

“We’re very conscious of the substantial number of claims that EQC has had to deal with and these represent a tiny proportion of their total claims, but we also recognise the frustration of customers whose claims have just reached or are yet to get to their private insurer. We have had constructive discussions with EQC and they are working hard to provide us with more clarity and certainty about the claims that will go over cap in 2015,” says Mr Grafton.

“While there will be more over cap settlements coming insurers’ way in 2015, even at this quarterly settlement rate we’re confident that the majority of over cap claims will be fully settled by the end of 2016 target,” he says.

“There are still some complications with claims involving multi-unit buildings, retaining walls and land issues, but private insurers are working in a concerted effort with EQC, CERA and local authorities to overcome the hurdles,” he says.

“Insurers and EQC have also been working constructively on how to improve responsiveness in the event of a major event. And the Insurance Council is also developing proposals on how we believe claims can be managed better for all concerned in future. These initiatives follow the recent release of the new Fair Insurance Code that includes timeframes for acknowledging and determining claims as well as keeping people informed about the progress of their claims,” says Mr Grafton.

ENDS

© Scoop Media