The standard of earthquake related commercial/residential repairs and construction:
A number of major construction firms are partnering with insurance companies to project manage the repair and rebuild work being done in the city. However a 56% majority of recently polled residents of Christchurch declared their disappointment in the rebuild processes so far. Construction standards and EQ assessments for buildings has become a major issue as of late, with proposals being issued for earthquake-prone buildings throughout New Zealand following the release of a review covering the failure of 21 buildings in the February 2011 quake. Many are saying that assessments of the seismic strength of buildings will take longer than the proposed two year time limit due to a lack of sufficient engineering capacity in the region. In comparison, a large number of rebuild workers from all over the globe have descended on Christchurch to aid in the ongoing construction.
The NZ government is seeking out legal avenues to hold parties accountable for the CTV building collapse that occurred during the Feb 2011 quake that claimed 115 lives. A report by the Canterbury Earthquakes Royal Commission found the CTV building was designed and built to sub par standards, and was not up to code when it was erected in 1986. Following the September and December quakes in 2010, inspectors (none of whom were engineers) gave the building a green sticker which denoted re-entry to the premises, only adding to the buildings sordid history. In September of 2012 it was discovered that the man who supervised the initial building construction had faked his engineering degree by stealing the identity of a retired engineer from the UK. The CERC report was released following an 8 week hearing back in June of 2012 on the matter, with Prime Minister, John Key calling it a “grim and sober reading”. Christchurch mayor, Bob Parker noted that the CTV building was signed off on “almost three decades ago” and under much different circumstances. He has said he would need to “take proper advice” before commenting on the 2010 re-entry sticker.
The EQC has endured criticism as of late for their role in the rebuild. An EQC engineer has recently come under scrutiny after making questionable assessments about the materials used in the construction of a ten flat rental property. This engineer, who had previously done over 2000 building assessments in Christchurch, had initially labeled the building inhabitable with a counter assessment by Auckland engineering firm BMC, quoting just the opposite. The EQC has also been criticized by private insurer VERO as of late for its handling of claims, with VERO suggesting that the EQC act as a re-insurer instead, letting the insurance companies handle the claims processes. It is reported that private insurers are more than a third of the way through settling their claims, with the EQC at just over 20% through with settling its claims. To the contrary, several insurance industry observers reflected that the EQC was given an impossible role, and considering the magnitude of the Canterbury disaster, hasn’t done “that badly”.
Insurance settlement delays:
Many Christchurch homeowners have expressed dismay with the local insurance industry, with some accusing the insurers of no action on their claims for over a years’ time. Due to the successive nature of the earthquakes, many believe that the insurance industry’s tactic of delaying claims has become especially widespread/common in the region due to the insurance companies using “instances” or “occurrences” of damage as weighing factors in the decision on whether to deny or pay out on a claim. Many see the local insurers as victimizing Cantarbrarians in an effort to fulfill a corporate profit strategy. A Christchurch man went as far as threatening to burn himself alive over his dispute with an insurer concerning his quake damaged property. Most Cantarbrarians are quick to remind that they are not the “complaining” type and that hard work and enthusiasm on their part are not the cause of these rebuild issues. They feel that insurers, both private and governmental agencies have a promise to live up to and they are falling short on delivering the relief required for such a disastrous event.
Of course, not all of the insurance companies have been saddled with accusations of poor claims performance. Many smaller insurers (mutuals) have been living up to their contractual obligations as best as they are able, according to reports.
Red Zone rockfall issues:
Damage payouts for “red zone” buildings in the Port Hills area of Christchurch hang in the balance with insurers reportedly using rockfall risk as a deciding factor in applying coverage. Many locals feel the New Zealand government has colluded with large, private insurers and re-insurers to “red zone” this area (among others) even though, they claim the risk associated has been mitigated and should therefore render the property insured. Insureds claim that a rock hitting a house does not compare to the damage caused by an earthquake, and that the rockfall risk is quantifiable with the risk of material damage being low. Insurers argue that “a number of risks are not located on the homeowners’ property, making remediation complex and potentially out of the affected homeowners’ control”, and that “We would need to work through these on a case to case basis”. Of course this will only exacerbate already delayed claims in the area and further “muck up” any sort of resolution for property owners in these zoned areas for the foreseeable future. A lifting of the red zone status for many would clear the way for earthquake damage claim resolution in the Port Hills section of the city.
A recent lawsuit filed in the Dallington area of Christchurch has brought attention to these red zone limits. Retired couple, the O’Loughlin’s have found themselves battling for the replacement cost value of their earthquake damaged property, as opposed to the much smaller repair costs offer form their insurer. The insureds argue it was untenable to discuss repair costs when the house itself could not be repaired. A representative for the couple has said it would take almost four times the amount offered by their insurer to replace the house on a new property. This case is the first to test the standard insurance stance on red-zone houses, and the result of the suit is speculated to bring changes to the insurance industry as a whole.
- Brownlee ‘blindsided’ by rockfall decision (stuff.co.nz)
- Rockfall-threatened homes covered (stuff.co.nz)
- Red zone insurance case in High Court (radionz.co.nz)
- Quake property owners becoming fed up (radionz.co.nz)
- EQNZ: “Concern over lack of insurance for council heritage buildings” (riskworldwide.com)
- Red Zone Deadline (thechristchurchfiasco.wordpress.com)