Kaikōura earthquake claims settlement

Determining the benefits and impacts of cash settlement of insurance claims on housing quality following the 2016 Kaikōura/Hurunui earthquake.
Repairing and rebuilding damaged homes following large-scale natural hazards is a key component of disaster recovery. In New Zealand, insurance plays a significant role in enabling recovery. Currently, cash settlement of insurance claims is the preferred approach of EQC and private insurers in New Zealand. Cash settlement was used following the 2016 Kaikōura/Hurunui earthquake, however the report of the Public Inquiry into the Earthquake Commission released in 2020 concluded there is some anecdotal evidence that these failed to translate into repaired homes in the region.
Project goals
  • To understand the nature of damage and claims value of housing impacted during the Kaikōura/Hurunui earthquake.
  • To evaluate the resulting impacts on housing quality from cash settlements following the Kaikōura/Hurunui earthquake.
  • To identify the key advantages and issues in the cash settlement process, including the extent of repair work undertaken, ability to find suitably qualified repairers, standard of repair, information availability, changes in repair cost, sale and purchase of property, consenting and building compliance, impact on homeowners, and insurance cover.
  • To develop a framework for considering the application of cash settlement following future disaster events.

This project will help to inform future residential recovery approaches in New Zealand by exploring what impact cash settlements had on housing quality and the wellbeing of claimants following the Kaikōura/Hurunui earthquake. In particular, the research aims to inform two key recommendations made by the Public Inquiry into the Earthquake Commission:

[5.1.3] Conduct a detailed assessment of the impacts of cash settlement of claims in the example of the Kaikōura/Hurunui earthquake, including the longer-term impact on quality of the housing stock.
[5.1.4] Incorporate the findings of the detailed assessment of cash settlement for the Kaikōura/ Hurunui earthquake into a larger and ongoing study that tests the advantages and disadvantages of cash settlement, the results of which could be drawn on when deciding the best response to future natural disaster events.

These insights will be gathered by:

  • Analysis of claims and building consent data to understand the additional construction workload generated following the earthquake (Tonkin + Taylor)
  • Desktop review of the Canterbury Earthquake Series (CES) and the impact the insurance settlement had on housing quality and claimant wellbeing. (Resilient Organisations)
  • Analysis of ‘as is where is’ real estate sales following the Kaikōura/Hurunui earthquake to understand how many homes were sold with earthquake damage. This will also be compared to ‘as is where is’ sales in Canterbury following the CES. (Infometrics)
  • Survey of homeowners to understand their experiences of the cash settlement process following the Kaikōura/Hurunui earthquakes, and the impact on housing quality. (Resilient Organisations)
  • Interviews with stakeholders including homeowners, building contractors, insurers, territorial authorities and real estate agents to understand the benefits and impacts of cash settlement on earthquake recovery. (Resilient Organisations)

Based on the above analysis, the project team will develop a framework that outlines the advantages and disadvantages of cash insurance settlement following a major disaster. This framework will map a decision path for the management of housing repair based on several factors including the scale of event, vulnerability of populations, construction sector capability, and insurability.

Project team
  • Charlotte Brown, Resilient Organisations Ltd
  • Sophie Horsfall, Resilient Organisations Ltd
  • Cameron Eade, Resilient Organisations Ltd
  • Eric Bird, Tonkin + Taylor
  • Dave Brunsdon, Kestrel Group
  • Nick Brunsdon, Infometrics

This project has been funded by EQC.

If you are interested in finding out more, please get in touch:

Charlotte Brown
+64 (0)21 142 5420

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