Five Years On: How Insurance Claims Arising from the 2010-11 Earthquakes Have Been Dealt With

New Zealand’s proximity to the geologically active Pacific Ring of Fire leads to 20,000 recorded earthquakes each year. Most earthquakes are minor but annually around 200 are strong enough to be felt.

Between September 2010 and June 2011, Canterbury was hit by three major earthquakes. While such natural events are not uncommon in the country, the intensity of those earthquakes, and the fact that they occurred so close together, caused considerable damage to the region, destroying buildings, roads and infrastructure. It affected 460,000 people, and damaged 150,000 homes; 20% of which (30,000) were seriously damaged.

This earthquake sequence was the fifth-biggest insurance event globally since 1953. It is estimated that the total cost of the reconstruction will be around $20 billion, which is 10% of the country’s GDP: $13 billion (65%) of residential damage, $4 billion (20%) to restore commercial properties and $3 billion (15%) to repair and replace infrastructure.

Five years on, we look at how insurers, insureds and the Earthquake Commission (EQC) have coped with the deluge of insurance claims that ensued.

According to the Insurance Council of New Zealand (ICNZ), as of May 2015, private insurers have paid out almost $15 billion to settle claims, 60% ($9 billion) for businesses and 40% ($6 billion) for residential claims. A significant number of less straightforward claims have gone to Court.

According to data collated by ICNZ and The Canterbury Earthquake Recovery Authority (CERA), 71% of all “over cap” residential claims are now “resolved” and 23% are still “in resolution”. Of the 11,200 “over cap” claims that received a cash settlement, about 6,000 were from within the red zone.

The EQC has paid out $500 million for contents damage and loss to almost 184,000 claimants, with an average payment of $2,700.

If you have been affected by the Canterbury earthquakes and are struggling to reach a satisfactory settlement, contact Grant Shand for confidential and professional advice, and to find out which options are open to you.