By Cameron Preston*
The Insurance Council of New Zealand (ICNZ) recently released its quarterly survey of insurance claim settlement progress in Canterbury.
In the press release the ICNZ repeated its assurance that they will “meet the end of 2016 target” for the completion of the residential rebuild in Canterbury.
Below is their progress compared to their forecast which they last updated in November last year:
The figures clearly show the insurers have a huge mountain to climb.
Notwithstanding they still have some 425 homes to rebuild just to meet last year’s target, this year will require a quadrupling of the rate to build 2,170 new homes.
In addition 951 repairs need to be caught up on, and then the insurance industry must achieve repair throughput more than 5 times what was achieved last year, a massive 3,020 properties.
"External Resolutions" is the industry term given to a either a cash settlement or some other type of agreement which shifts the risk and responsibility of the rebuild or repair off the insurer and onto the policyholder.
Progress in external resolutions clearly show that the Insurance Council’s PR spin that 42% of claims are fully settled, while correct, has mainly been achieved through the external resolution of Red Zone properties.
Red Zone claimants were unable to rebuild or repair on their land due to land zoning changes. The majority of these claims have now been settled and external resolutions have fallen back to about half of what was forecast in 2013.
The fall in external resolutions reflects the risk appetite of conservative Canterbury homeowners, who may have a property on land that requires extensive foundations work and are not happy to bear the risk of building themselves, especially if the offer does not include any risk premium.
The progress of rebuilds, repairs and external resolutions are an issue for both insurers, who will wish to exit the Canterbury rebuild with their reputation and balance sheet intact, and homeowners, who after 3.5 years are growing increasingly restless.
In my opinion, the ICNZ’s unwillingness to acknowledge problems, their constant use of statistics to illustrate a black box that they describe as the ‘pipeline’ into which properties enter but never seem to come out the other end, masks and delays genuine constructive discussion on ways to move forward.
Certainty the hallmark of the Canterbury recovery to date has been the top-down style of communication and direction, which in my opinion is leading to implosion of the insurance industry, fanned by expensive and unproductive pending Court actions, and only extinguished by greater regulation.
Cameron Preston is a Christchurch homeowner who has longstanding unresolved quake insurance claims.