Wednesday, August 31, 2011

EQC, WHAT OF THE FUTURE?



Now it is official EQC is broke.

Now is the time to reassess its relevance, practicability, efficiency and even if it was best Practice in any measure.

After some 60 years of accumulation that suffered a few small set backs it has only just covered the ultimate test of its performance as we speak.

If as many expected Wellington had suffered an equally calamitous event then its inadequacy would have been cruelly exposed. That may still occur as I do not accept 1 in 100 year events can't happen in successive years.

I have posted previously on allowing the insurance Industry to incorporate quake risk as another part of its comprehensive cover, let the insurers meet that as an annual levy and get the government out of the business they were hopelessly unprepared to meet their obligations in.

I am aware of many rorts where deferred maintenance and non quake related damage have been compensated in quake settlements by a casualised workforce that company assessors protecting a companies policy as opposed to a "bottomless pit that the gummint would cover", would have declined as such.
Sheesh even those who choose to under-insure or don't insure at all, have received compensation from the EQC fund.
All the while many who thought they had acted responsibly are now finding they are aggrieved at what they see as less than their perceived real cover with the crossover between EQC and their insurer complicated by a welfare component from the Government.

Following the upcoming election the new government should place the whole problem to a comprehensive review and leave the default socialist position out of it.

8 comments:

Anonymous said...

I think that's harsh. Its not perfect by any means (its govt run after all) but it has made a recovery possible that ordinary insurance, which would never get involved in land cover, possible. There is no where else in the world where such a scheme is available.

Imagine, no red zone compensation. Land suddenly worthless and having to bridge the gap to a new section (assuming the house is stuffed and the insurer will pay for it).

Paulus said...

As a retired person in my working life I had over 40 years knowledge and experience in what has now been discovered as Reinsurance, 35 of which in New zealand.

I has a serious commercial relationship with EQC for that time.

Sucessive Governments have continually hamstrung EQC financially. It took years to persuade Government that EQC needed Reinsurance which in hindsight was a good decision.

Simply put now EQC cannot be ressurected whether in its exisiting format or something new.

Government should seriously consider saying we cannot carry on with an EQC. Sorry - the Insurance industry will have to take over from ground up. They will scream but tough - they have sufficient parentage and the ability to buy Reinsurance world wide.

It will cost policy holders, but it will do anyway. New Zealand is an Earthquake prone country wherever. There is a Risk and that
can be evaluated wherever by the Insurance Industry and Reinsurers.

EQC sadly is dead.

gravedodger said...

@ Paulus Danny Watson who I rate as in the realist camp is promoting a "government insurance scheme" with compulsory levies on Rates to fund it.
His credibility is seriously eroding with every word.

Would you have any idea as to total levies collected over the nearly 60 years and how it stacks up with fund performance and return.
My email is in my profile above, you seem to be in the minority with me on this.
Thanks for your factual summation.

gravedodger said...

@ anon 12 43 come back with an ID and I would love to debate with you.

Mort said...

I agree, the EQC should be disbanded hence forth.
The insurance companies should be offered the business and also be allowed to test new subdivision sites to ascertain the risk profile for things like liquefaction.
The EQC has been used as a slush fund for various govts for cheap funds. It would be interesting to OIA the annual levies and claims from 1960 onwards, and look at the actual ROR. My estimations have it that even at a 5% yield there should have been $30B in the coffers... but how much was there? $1.5B and a few Govt IOUs...
EQC is like every other Govt dept, under-preforming, over officed, and simply a waste.
roarryto

Tinman said...

Anecdotally I've heard of surprisingly few "rip offs" with EQC claims.

More often, it has been certain mainly budget-type insurance companies that have been "ripping off" their clients.

I'd hate to see EQC disbanded but would like to see the fund rebuilt and locked so no future government could use it's funds for any other purpose.

Meantime the NZ Government needs to advise insurance companies that if they want to operate in NZ they must cover ALL areas within the country.

Greedy insurance companies handicapping the rebuilding of Christchurch after being happy to take Christchurch money for 100+ years must be brought into line.

shunt said...

This terrifies me. The EQC needed to be set up and managed in such a way that if and when Sept 4/Feb 22 happened, EQC would still exist to cover future events. As a resident of Wellington who pays for contents insurance (I don't yet own a home but will someday) I expect EQC to compensate me when the circumstances dictate they should. I will be irate if this is not the case.

I knew someone killed in the February 22 earthquake and am still moved to tears by footage of the quake, the damage to the city and the heartbreak of the people. But the government needs to make sure the EQC lives on after this tragedy because it will happen again. Wellington's time is well and truly overdue. I am so glad I'm young and have my working life ahead of me to restore my life post disaster.

More generally, the idea of a Wellington quake is terrifying. The airport sits on a flat piece of land in danger of a tsunami. The western hills straddle the faultline and the Hutt Valley will flood and liquefiate like a teenage boy looking at porn for the first time. In short, the Wellington region is doomed and a decent (M6+) quake will level the city and kill many through crush injuries, burns and disease. It will look like a warzone.

Mort said...

shunt: things would be a whole heap easier if the EQ and disaster insurance was covered by private insurers, there wouldn't be the need to for govt bureaucrats to get in the road.
the fudging of numbers wouldn't have happened with Private insurers, the way it has with successive govts robbing the kitty to pay for whatever election bribe they had up their sleeves.