Insurance Council calls on Govt to include buildings vulnerable to falling ceiling tiles and fittings in rules on Earthquake Prone Buildings

Insurance Council calls on Govt to include buildings vulnerable to falling ceiling tiles and fittings in rules on Earthquake Prone Buildings

By Lynn Grieveson

The Insurance Council is calling for the definition of an 'earthquake prone building' to be extended to cover any building with fittings or internal partitions that might fall in an earthquake.

Such a definition would've covered the earthquake damaged BNZ Harbour Quays building in Wellington, where the bank has put the damage at about $10 million for which it says it's insurerd.

Insurance Council Chief Executive Tim Grafton told parliament's Local Government and Environment Select Committee on Thursday in a submission on the Building (Earthquake-prone Buildings) Amendment Bill that the proposed legislation was ignoring major earthquake vulnerabilities by not covering non-structural risks.

The legislation would require councils to assess all non-residential and multi-storey buildings in their districts within 5 years and specify which buildings were quake prone. The vulnerabilities of those quake-prone buildings would then be detailed on a public register and repairs to bring them up to standard would have to be completed within a further 15 years. Including internal fitings and partitions in the definitions about what made a building earthquake prone would dramatically widen the pool of buildings likely to be deemed earthquake prone.

John Lucas, Insurance Manager with the Council, said another option would be a compulsory building warrant of fitness that set standards for "seismic restraints" of installed equipment and fittings such as telecommunications equipment, sprinklers, heating ducts, light fittings and partitions.

"We believe that the big issue with the risk of ceilings falling down and the equipment that sits above those ceilings is very real," he said.

"We believe there is a fairly simple way of having that monitored either through a change to the definition of what an earthquake prone building is to include the risks of internal partitions and ceilings falling down that could give high risk to life and safety, or an inclusion in the building warrant of fitness regime."

Grafton acknowedged that defining an earthquake prone building as "one that is fitted out through non-seismic restraints that could cause injury or death" would be a major expansion to the scope of the proposed legislation.

"Well, it may be," he said.

"But if the intent of this legislation to address economic loss and risk to human life then we are just advising you that you are ignoring one of the most significant risks."

'Nowhere is safe'

Grafton also sent a warning to building owners, including those in Auckland, who resent having to spend money on earthquake strengthening because they believe a quake is unlikely in their city.

"There is probably nowhere in New Zealand that can safely say we are free from that kind of earthquake occuring, " he said.

"We are in a highly seismically active part of the world, and though there might be more relative identified risk with respect to Wellington and now Christchurch, no part of New Zealand is immune from these kinds of risks."

Former parliamentary adviser Murray Darroch agreed, drawing the Committee's attention to the book "Hostile Shores: Catastrophic Events in Prehistoric New Zealand" which he said showed the 15th century, in particular, was marked by a rash of major earthquakes and tsunami.

'Abandoning insurance'

The select committee also heard from Wellington apartment owners facing large earthquake strengthening bills.

Body Corporate chair Tony Simpson said people "were in despair" about it.

"Four years ago we were paying NZ$12,000 a year for our replacement value insurance," he said.

"Last time we had an estimate done, which was about a year ago, the premium was NZ$130,000. We have done the obvious thing we had to do and said we can't afford that and have had to can our earthquake insurance."

"We said 'okay, we have two options - we can put this money towards strengthening the building or we can allow some underwriter in Surrey to live in the manner they have long grown accustomed to' - and it is not rocket science to understand which one we went with."

Questioned about the finance implications of those with mortgages going uninsured, Simpson said some of the apartment owners had asked the Body Corporate the same question.
"I made some inquiries within the banking industry and the advice was the same. If you ask that question formally you'll be in trouble. But informally, as long as you go on paying your mortgage nobody is going to do anything at all. And why would a bank? If you go on paying a mortgage why would the bank go and stick their nose into that?"

'Policy unaffordable'

Meanwhile, big business lobby group Business NZ said the policy requiring quake prone buildings to be upgraded to certain standards or demolished could be unaffordable for some communities.

Business NZ economist John Pask said the policy was not necessary because normal market pressures were leading to buildings being upgraded or demolished.

“Earthquake-vulnerable buildings are already attracting higher insurance premiums and this will automatically lead to building owners strengthening them accordingly or demolishing them," he said.

“Putting a regulatory requirement on top of this situation, where building owners have to upgrade or demolish within 20 years, is unnecessary. Smaller communities with older buildings could struggle to pay for extensive upgrading and might be forced to pull them down. The policy could lead to many buildings across the country being demolished needlessly."

In some areas removing unstable facades was more realistic than significant strengthening, he said.

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Insurance council is right.
One can't put a price on human life.

Laws all around the world exist to balance human life against ecomonics.
If 'save life at all costs' was true then it would be illegal to drive anything other than top safety rated cars costing 15k minimum. This would also mean whole economies that implement such strict save life at all costs' policy would be rediculously uncompetitive, prob 50% + unemployment, govt. funded 'safe' cells for homes,  with supplement enriched rice fed.
Similar thing with earthquake risk.  If we are 100% safe from quakes, then N.Z would be empty, maybe used as a tourist attraction where people go for a few days after signing a waiver.

So in effect some flats in Wellington, are all but worthless. Also legally are not insured and the owner(s) knows this which is fraud surely?

Very rare. 
Ofcourse if the media locate any they will make a headline and make it seem like its common place.
I know of the 30+ apartment complexes under management of one firm, insurance premiums have been slashed by a third this year alone.  Like dairy prices, once the re-insurers see the money to be made they come back and compete the prices down again. 

An imagined commercial building inspection by a Certified Council Minion; accompanied by a SiteSafe Inspector , the Building owner, and Office Staff:
CCM - well, looks like you have a 3.6m suspended ceiling in 'ere.  I need to have a dekko inside that - might be hiding heavy HVAC and have Decayed Suspenders - can you pop half a dozen tiles and lend me a ladder please?
BO- sure, I'll get the caretaker to fix you up.
SSI- Hang on, sunshine, 3.6m, you'll need a certified moveable platform, guard rails, steel capped boots, a safety harness, an electrically certified safety light, a hard hat, gloves and sunburn protection around your neck.  Plus a certified Platform Operator with WTR license extension and current site-safe credentials.  Oh, and a temporary Public liability cover for them, in case they exterminate an office worker or three with that rig.
BO - Why don't we just re-schedule?  Shall we say next year then?
CCM - Well, my report will state 'Denied Adequate Access'......and I don't even like to think what your insurance is gonna be...