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Insurance Council looks to high court for a decision on claims cut-off confusion arising from multiple earthquakes 'events' in Christchurch

Insurance Council looks to high court for a decision on claims cut-off confusion arising from multiple earthquakes 'events' in Christchurch

A stand-off between the Earthquake Commission (EQC) and the Insurance Council of New Zealand over cut-off dates for claims arising from the Sept.4 and Feb.22 quakes has fallen to the High Court for resolution.

Despite weeks of negotiation and discussion over the contentious matter, insurers and the EQC have been unable to settle their differences over the commission's decision to reject second event claims on householders who had not yet been paid out from September 4, 2010.

In a joint press release announcing the legal action, the parties said High Court involvement was the best way for the EQC and the industry to get certainty on how to apply the Earthquake Commission Act of 1993, given the ''unusual circumstances generated by two major earthquakes in the same location over a matter of months.''

“EQC and the insurers want to get certainty on this difficult issue as soon as possible to ensure the smooth running of the claims settlement process,” said EQC's chief executive Ian Simpson.

“The important point is that we all agree on is that it shouldn’t affect payments to people who have suffered losses. It’s really about how much cover EQC is allowed to provide in these unusual circumstances.”

Earthquake affected residents in Christchurch and their insurers have accused the EQC of unfairness in choosing to accept as a second event claims where a pay-out from Sept. 4 had already been made while bundling under a single claim damage arising from Sept. 4 and Feb. 22 in those instances where a pay-out had not yet been made.

EQC officials said in the "majority of cases" full cover had been reinstated, meaning most people claiming were eligible for second event coverage.

The financial implications for insurers forced to compensate on damage beyond the $100,000 (plus GST) on EQC pay-outs for structural damage and the $20,000 for contents, is significant given the destruction caused by the Feb. 22 quake was extensive.

Insurance Council Chief Executive Chris Ryan said the issue was "complex" and required a legal opinion to resolve.

While Simpson maintains the claims process is "smooth running" those are the coal-face beg to differ. Accounts of lost paper-work, confusion and delays are rife with even more pressure created by Monday's 6.3 quake. (To read an EQC insider's account, click here).

Christchurch residents will be at the mercy of the wheels of justice with respect to any potential "smoothing'' effect of a High Court judgement on claims processing.

Canterbury mental health liaison officer Cerina Altenburg, in an interview with Radio New Zealand, said Cantabrians are exhibiting signs of "extreme stress, similar to that experienced by people living in a war zone.

"People who have never previously approached any psychological support services are finding themselves out of their depth and overwhelmed,'' she said, adding that people were self-medicating with alcohol to deal with "chronic anxiety.''

Domestic violence is also on the rise with the Women's Refuge reporting a 30% increase in it caseload since Feb.22.

Meanwhile, the EQC confirmed that Monday's 6.3 after-shock on June 13 will be classified as a third event, for the purposes of insurance. Affected residents have three months from that date to file a claim with EQC.

'Don't know how many claims are affected'

Neither EQC nor the Insurance Council would tell how many claims fell under the court case, as the matter was before the courts. The dispute will be held in the Wellington High Court, although no date had been set when enquired on Thursday afternoon.

Minister for Earthquake recovery Gerry Brownlee told later on Thursday there were a number of small claims that would be affected by the court case. Brownlee was unaware of how many claims there were.

“We don’t know, and there will be more claims lodged as a result of Monday, so it’s hard to know. Then there are various trigger points in the date in which claims reset because of the annual rollover and stuff like that,” Brownlee said.

“It’s not easily quantifiable.”

Asked about the wider insurance situation in Canterbury, Brownlee said his dealings with the industry led him to the conclusion it had been able to meet all its obligations.

“They want to meet their obligations and they need an environment in which they can meet those obligations. We haven’t quite got there just yet,” Brownlee said.

“To be fair to them it was well-known after the September 4 earthquake that the insurers wanted to wait a period of time – they wanted, ideally, 30-plus clear days with no aftershocks over three on the Richter Scale,” he said.

“That situation simply hasn’t arisen. They’ve done their best in what is an ongoing seismic event.”

(Updates with comments from Brownlee, fixes link to EQC assessor's comments.)

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How about a test of legal ability for the great minds here at :)

Can we assume that we are talking only about cases where the total amount of the claim for both event is in excess of the $120K (plus GST of course).

So the argument is whether EQC should cover the $120K for each event. Well quite frankly why shouldn't it?

Surely the only contention here is caused by administrative delays within EQC. 

scarfie - I'm no brief, however, I wonder if eqs were appreciated as a process over time, rather than a singular event the legislation might have be drafted differently, particularly for eqs, see:

'More shakes for a while but forecast unchanged'

scarfie - following on, I have had the dubious pleasure of having to read certain parts of the EQ Act and the following, I think, means payments made in one contract period cannot be amalgamated with those for another event in a subsequent contract period:

"(2) For the purposes of this Act, a renewal of a contract of insurance shall be deemed to be a new contract."

As for payments per event within the same contract period, all we have is EQC setting predecdent, so far, I guess, but see my comment above - is it reasonable to interpret an eq as one single event? Taking an eq as a process over time has further implications and also might imply a further reason for the apparent change of pace in payments being made?

Good Les, always interesting to look into the Act to get to the heart of the matter. There are a few interesting bits and pieces in there. 12 months to settle the claim, but only from when the damage has been quantified.

I think that sticky point is goint to be whether a new contract is in force, or others are simply paying the old one until the claim is settled. By the fine print EQC are legally right, but I suspect it will come back to whether the administrative delays are the only reason some have been paid and some not. I think a reasonable judge will apply a one rule for all finding.

 The system is f…ed – call for the real people of Aotearoa !

 This is a national catastrophe and need to be fixed – urgently – with practical solutions.

 The stories coming out of Christchurch are heartbreaking. How many families are financially broken, have nowhere to go, are without a job - and break under stress and misery – 500 - 5’000 – 50’000, 100’000 ? The current and ongoing situation in Christchurch is a national catastrophe.

From where and when does the money come from to make sure those people can be assured about a decent future ?

Funds should be created to instantly plan, construct safe facilities and fill the vacuum of lack of shelter, infrastructure and jobs.

Experts suggest there are safe locations around Christchurch. So - new, affordable  “Living- Working communities” around Christchurch can be created.

Obviously the government is too slow to introduce an instant levy now.

The government should be forced, demanding payment from our society – urgently.

Level payments depending on incomes – do it now.


$ 200.-  from $25’000 – $50’000.- income earners.

$ 500.- from $50’001 – $80’000.- income earners.

$ 1’000.- from $80’001 – $110’000.- income earners.



More ideas:

Why not introduce transparency about donations ?Did our celebrities, sports stars, politicians, etc. donate money – how much ? Nobody ask – nobody knows !! Why not introduce a national donation competition for the rich ? Where are local governments to provide cheap land to rebuild businesses/ houses ?  Why does the media not run public weekly donation competitions for businesses/ individuals ? Why not publish donation lists in the NZmedia ?

Go for your life Walter..sell all you own and give it to Gerry to hand out...or you could calm down and sink a few pints.

 Big Gerry – failed to handle “Pike River” properly.


I must say I'm not sure what you'd want to achieve by making public who among "our celebrities, sports start, politicians" donate money. Would it be a name and shame attempt?

While I would hope that many richer-than-average people would want to contribute through donations, at the end of the day, the whole point of a "donation" is that it is voluntary and those people have as much right as you and I to choose how they use their money (whatever is left of it after tax, bills etc). Also, I think you'd find that a good proportion of the people making sizeable donations wouldn't necessarily appreciate their name being made public (those who genuinely care don't donate for publicity!).

Walter's busy sinking pints Elley.....!


Elley, Wolly - what Christchurch people urgently need are even better ideas then mine. Do you have any ?

It's hard to have great ideas when the main thing on my mind is, and has been for a while, "I hope there isn't another big aftershock and if there is, I hope the building my husband is in won't collapse and that my kids will still have a dad next year"...

So no, I am afraid I don't have a wonderful idea to instantly save Chch/Canterbury. Nor did I say I had. I just don't think publishing a list of which celebrities donate would be very appropriate.

  Elley –   I just don't think publishing a list of which celebrities donate would be very appropriate.

Great yes - that brings us a little step further – (public servant mentality - any charges for that ?).  

Just publish the ones, who like to be in it then - and it could have a “snowball – effect”.




Care to clarify your 2nd sentence?

Hmmm, apparently not so I won't try to reply cos I don't actually understand what you meant.

i'm hearing you on this one Elley  "I hope there isn't another big aftershock and if there is, I hope the building my husband is in won't collapse and that my kids will still have a dad next year"... this is now at the back of everyones mind that I have spoken too, not a nice environment at the moment...

and I know what reaction i will get for saying this..but it is the one time that people probably don't/didn't  want to have too much capital in there property and had money available elsewhere so you could make easier decisions on if they should stay or go, those that are not tied to a property or good job are probably going to go I am sad to say, because after three big ones the above is really at the back of your mid.


Heaps Walter..but none of them would get passed the vested interests...that is the problem...Chch is just a small version of the national economic and social mess.

 Wolly - but you write comments explaining/ complaining about the situation only every hour or so – for what – without providing ideas – stimulating improvements/ progress – it doesn’t make sense mate ?

"Every hour or so"...gosh I should send BH a bill...some days I post nuffin Walter...and somedays I post ideas...waste of gotta place the pressure on the pollies to come up with the goods...that's what they take the big fat salaries for....

And the Chch residents are quite capable of making their own bloody decisions. Wolly - ....and the Chch residents are quite capable of making their own bloody decisions.


As I mentioned above - the people of Christchurch need help from the rest of the nation - urgently..

I know of around 120 fat useless p***ks in Wellington that could help. I don't think the country would notice if they were out of action for six months with a shovel in their hands clearing the muck. The excercise and the experience might even do them some good. They might come back from that with some fresh ideas on how to help.

Actually each of them has 3 or 4 hangers on, so we could send them down also. 

Please don't send me a bill Wolly



Please don't send me a bill Wolly

as refusal often offends..!

Great idea, re donation list Kunst. Whew, I'm in the is my conscience. Couldn't agree more on shared responsibility. People need to step up! 

Through various organisations Amanda many choose to work away quietly on frontline issues that provide comfort but solve little in the long term.

The people of Christchurch are seeking some kind of certainty from central Govt...they  are tired...and worn down by the events...only to be further exacerbated by bumbling bureaucrats balking in fear..or self interest or both...In the meantime I shall continue to send support through the Salvation Army who I trust do their very best on a day to day basis.

You know, you don't have to wait for a disaster to happen to "step up" and "share responsibility". There are plenty of people who would benefit from others' generosity at any given time :)

I've been involved with a number of organisations for a decade and I'm in my mid-thirties so started pretty soon after I started earning an income; in fact, also regularly used my pocket money for donations when I was a kid. But I still disagree with the donation list suggestion because at the end of the day donating is a personal decision, not something compulsory, and also limiting public disclosure to celebrities/sports stars/politicians doesn't seem quite right.

Hi all, I've updated with some comments from Brownlee. He wouldn't be drawn on concerns of how the industry was handling things.



Heard Bernard advertising the link to the EQC insider's blog post on Radio NZ's 'The Panel' this afternoon, but the link appears broken...??  Can someone please post the correct link...?  Cheers:-)