The Earthquake Commission (EQC) and private insurers have today announced a new partnership that will provide an improved, more collaborative approach to supporting New Zealanders through natural disasters in the future.
Under the new partnership, from the second quarter of 2021 anyone with home insurance whose home or land is damaged in a natural disaster will only need to lodge one claim through their private insurer.
“These arrangements will ensure that customers can deal with their insurer who will assess, manage and settle their claim,” said Tim Grafton, Chief Executive of the Insurance Council of New Zealand. “This will ensure a more effective and efficient response, delivering simplicity and certainty for customers during a very stressful time.
“Customers must always come first and developing these arrangements in partnership with EQC will ensure New Zealand has one of the best natural disaster response platforms in the world,” he said.
Eight private insurance companies – AA Insurance, Chubb, FMG, Ando (Hollard), IAG, MAS, Vero and Tower – have worked with EQC on the partnership model, with a singular focus on improved customer outcomes.
EQC Chief Executive Sid Miller said the partnership builds on the model used following the Kaikōura earthquake, and more recently in responding to the Northland floods in August.
“The response to the Canterbury earthquakes highlighted that New Zealand’s dual insurance system meant customers had to make two claims – one to EQC up to a capped level of the damage and the other to their private insurer for top-up cover losses. This was inefficient and frustrating for our customers.”
Under the new agreements, private insurers will manage the total claim, including the EQC portion up to the statutory capped level of damage[1], and then any claim under their private insurance to cover additional losses up to their sum insured. Under the partnership, insurers will also provide data to EQC about where insured homes are located, so EQC can better model its exposure to natural hazards.
Mr Miller says the new approach builds on the findings from the Government’s Public Inquiry into EQC, as well as the lessons learned from the Canterbury and Kaikōura earthquakes, to benefit all New Zealanders for the future.
“We know that EQC cannot respond to a large natural hazard event alone, and this new partnership will streamline the insurance process and ensure we make best use of existing sector capability and expertise to meet the needs of New Zealanders when the next natural disaster occurs. Once set up, it will double our capacity to manage claims from a natural disaster.”
“This much improved customer experience, improved data sharing, and increased claims capacity is a milestone for improving our readiness to deal with future natural hazard events,” Mr Miller said.
“If a natural disaster event occurred before the new model commences, we would respond in the same way we currently do and for any large event, the intention would be to use a similar response model to that used for the Kaikoura earthquakes.”
The new model is expected to be in place from the second quarter of 2021 and EQC is now working with individual insurers to satisfy requirements needed for the model.
[1] EQC covers damage from natural disasters like earthquakes, volcanoes, tsunamis, natural landslips and geothermal events, with building damage capped at $150,000 ex GST. It also insures for fire resulting from any of these natural disasters, and land damage from storms or floods. In future, private insurers will manage and settle all EQC’s under cap claims as well as their over cap claims.
