Settled claims in wake of New Zealand quakes surpass $7 billion

Insurers in New Zealand have reached claims settlements amounting to more than $500 million over the past three months, bringing the total injected into the Canterbury recovery to $7.23 billion.

Canterbury residential homeowners and commercial business owners witnessed damage from earthquakes in September 2010 and February 2011, as well as the continuing aftershocks.

Total claims settled so far consist of $4.87 billion in commercial claims and $2.36 billion in residential claims, the Insurance Council of New Zealand notes in its latest Insurers Canterbury Recovery Progress Report, released Tuesday.

Of the 173,000 residential properties with a claim, the latest data shows 23,000 have been confirmed as insurers’ responsibility. Of that number, 6,200 have had their claims resolved and 2,600 are in the design or construction phase. That compares to 3,600 and 2,200, respectively, when the last progress report was released in late February.

The remaining 14,000 claims relate mainly to “those who have yet to decide on the offer given to them by their insurer, those who live in multi-unit and cross-lease properties, those living in the most severely damaged land areas and some hill properties,” notes the council statement.

In the February progress report, the council noted insurers generally give existing customers priority over new ones in making insurance available in Canterbury. Existing customers are being offered insurance for new builds or new house purchases, the council reported at the time.

Insurance will not be provided for homes in the designated Red Zone, and the most difficult areas to get home and contents insurance include areas where properties have had structural, liquefaction or land damage.

With regard to businesses, the Business Continuity Institute reported in 2012 results from 17 organizations interviewed earlier that year. For the two survey respondents affected by the 2011 Christchurch earthquake, they reported it took between one and 12 weeks for business supply chains to recover.

The Canterbury earthquakes were recognized internationally as one of the largest and most complex insured loss events in history, notes a council statement from last July. At that time, “progress settling insurance claims, particularly residential claims, had been hampered by difficulties associated with obtaining accurate land data and the sheer number of individual claims the insurance industry was dealing with.”

The expectation was there would be a $15 billion private insurance payout for the Canterbury economy by the time the Christchurch rebuild program is completed.

A recent report from the United Nations Office for Disaster Risk Reduction determined that direct losses from disasters globally are approximately $2.5 trillion to date this century.

UNISDR issued a stern warning to the world’s business community that economic losses will continue to escalate unless disaster risk management becomes a core part of business strategies.

But there are encouraging signs of change identified in the report. These include public-private partnerships in risk management during several disasters, including the 2010 and 2011 earthquakes in Christchurch.