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 findings

Through the analysis of claims and consent data, a claimant survey, and stakeholder interviews, we evaluated the impacts of cash settlement following the 2016 Kaikōura/Hurunui earthquake on housing quality and claimant wellbeing. The analysis highlighted lessons for the residential repair process following future events.

Generally, the research identified that claimants from this event chose to undertake repairs and were satisfied with the quality of repairs. There is evidence that some structural repair work may have been completed without the necessary building consents or council exemptions. Some homeowners were frustrated with the damage assessment process, particularly where repeated assessments were undertaken. This eroded trust in the insurance settlement process and contributed to protracted claims settlement times.

In terms of future events, the research shows that cash settlement is an effective tool and is preferred by the majority of claimants. However, the nature of the event and communities impacted will likely influence whether cash settlement is a good model and/or whether alternative options need to be provided to claimants in the future.

Regardless of the insurance claim settlement model, the process needs to provide good access to information, autonomy and choice, quality damage assessment processes and repair quality assurance processes.

Summary of key findings
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.
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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