New Zealand insurers pay out more than $10 billion for Canterbury earthquake recovery

Insurers in New Zealand have paid out more than $10 billion in commercial and residential settlements from the Canterbury earthquake recovery, the country’s Insurance Council said on Wednesday.

As of the end of 2013, $6.7 billion has been paid out for commercial settlements and $3.5 billion for residents affected by the 2010 quake, according to the council.

“Of the $6.7 billion of commercial claims paid out, $2 billion was in 2013 alone and that doesn’t include recent settlements such as the largest insurance pay out in New Zealand’s history to the Ports of Lyttelton of $428 million,” the Insurance Council’s chief executive Tim Grafton noted in a press release.

The Ports of Lyttelton payout will occur in the first quarter of 2014, the organization said.

“That means 70% of all commercial claims have now been settled and reinforces the value of insurance in helping the commercial sector to quickly recover from what was one of the biggest-ever insurance disaster events globally,” Grafton noted.

“The commercial payouts also includes $1 billion in business interruption insurance, money that helped Canterbury to get back on their feet quickly following the earthquakes,” he added.

Data from the Canterbury Earthquake Recovery Authority suggests that at the end of 2013, 54% of all Over Cap and Out of Scope claims with insurers and government-owned claims management company Southern Response were settled and completed.

Out of Scope claims are those outside the scope of New Zealand’s Earthquake Commission (EQC), which includes driveways, pathways and swimming pools. Over Cap claims are those above the $100,000 plus GST cap for the EQC.

The CERA data also notes that insurers have 64,925 Out of Scope claims of which 37,932 have been settled and completed. Insurers have 21,962 Over Cap dwelling claims of which 9,119 have been fully settled and completed.

There are 9,759 more Over Cap dwelling claims waiting, bringing the total settled and completed and in progress (after agreement with the insured) to 86% of all Over Cap residential claims, according to the council.

“Last year we also started to see completed insurer-managed rebuilds and repairs that began in 2012 come through the other end of the pipeline, with 725 rebuilds and 769 repairs completed by the end of 2013,” Grafton noted.

“These were insurer-managed rebuilds and repairs that could only have started late in 2012 because of ongoing seismic activity, the release of building guidelines and ongoing EQC apportionment work,” he said.

The council said that builders are reporting more than 6,000 residential properties were built in 2013 and will increase to 7,000 in 2014. Much of that will be from insurance monies released through cash settlements, the council noted.

“Also consenting forecasts from the Christchurch City Council indicates that 2014 and 2015 will be a big year for the completion of insurer-managed residential rebuilds and repairs,” Grafton added.