Natural Hazards Insurance Bill (2022)

A bill proposing to update the legislation governing the Earthquake Commission was introduced into Parliament in March 2022. The overarching objectives of its changes are "to enable better community recovery from natural hazards, to clarify the role of the Commission and the cover provided by the Bill, and to enhance the durability and flexibility of the legislation.".^[20] The Commission's name will change to Toka Tū Ake Natural Hazards Commission.

EQC's handling of the earthquake claims

EQC's preferred method of settling claims till this point had been to make payment rather than to repair the damage. However, soon after the 4 September 2010 earthquake, EQC's then chairman, Michael Wintringham, confirmed in the commission's 2010–11 Annual Report that it had been asked by the government to settle claims by repairing buildings, (if the cost was not above cap, in which case EQC would cash settle and pass the claim to the owner's private insurance company).

This preference to repair was both to prevent the predicted upward spiral in building costs if repair money flooded the market, and to reduce the inevitable stress on home owners having to manage their own repairs.^[30] The then Chief Executive, Ian Simpson, prefaced these comments by stating: "It is important that we are accurate with our claims settlement process. Not just for our customers in a very difficult and uncertain time but also for the continued confidence of the global insurance market and the protection of the EQC funds for all New Zealanders".^[31] The protection of the Disaster Fund is a core responsibility of the Commission. EQC's later response was to engage Fletcher Building, the country's largest construction company, as its agent to undertake the necessary repair work. The result was The Canterbury Home Repair Programme. In doing this, EQC indemnified Fletcher Building against any future liability.^[32][33] In June 2013, the Auditor-General reported on EQC's performance in managing the Canterbury Home Repair Programme. She found it had been "mixed".^[34]

For building claims, EQC chose first to assess properties to determine the extent and cost of repairing any damage. This was usually carried out by a two person team comprising an assessor and an estimator.^[35] Assessors had no specific qualification other than to be seen as persons of good character with the ability to spot any unjustified or fraudulent claims. Retired police officers were often used.^[36][37] Estimators had building industry experience.

During this period, EQC pointed out the magnitude of the task it faced, its relative success, and the external factors that hindered it from providing an even better service. In 2013, commenting on a report it had commissioned, EQC said: "(the) earthquakes involved the kind of damage you would expect in wartime". It continued: "much has been achieved by EQC throughout the process of responding to Canterbury events as assessments have been completed, contents claims settled, emergency work undertaken and managed repairs underway in Christchurch".^[38]

Aside from settling claims, the commission had to deal with many litigation issues.

In 2011, the High Court decided to establish an Earthquake List to handle the expected large number of earthquake related cases. By February 2018, 1,048 claims had been filed, many of them involving EQC.^[39]

In March 2013, EQC was criticised after an employee accidentally sent a file containing details on more than 80,000 claims to a contractor.^[40] EQC obtained a High Court injunction preventing publication, which a disgruntled ex-employee and blogger breached by publishing an online link to the list. The blogger was found to be in contempt and fined.^[41]

In 2015, an earlier finding of "incompetence" against an engineer working for EQC was dismissed by the Chartered Professional Engineers Council (CPEC).^[42]

In 2015, a group of around 100 home owners launched proceedings against the EQC for not settling claims according to the standard required by the EQC Act. In April 2016, both parties agreed in a public statement that EQC's standard did comply with the act. The group then discontinued its claim. Both sides claimed success. The High Court awarded costs against the group.^[43][44][45]

Results of EQC's claim handling

Throughout the process, EQC received unwavering public support from the minister responsible, Gerry Brownlee.^[46]

This support was contrasted by countless reports of EQC mismanagement at every level.^{[original research?][47][48]}

In October 2017, a new government was sworn in and the minister responsible changed. In February 2018, Megan Woods, the new minister, expressed her frustration with the EQC board and the pace of claims settlement. After seven years there were more than 2,600 claims still unresolved. She said she would appoint an independent ministerial advisor to work with the board and management who would report directly to her. The minister said: "I've made it clear I am not satisfied with where EQC is in respect of the Canterbury earthquake work seven years on from the 22 February event".

In response Maarten Wevers, the chairman and a lifelong public servant, resigned. He stated: "It is clear that the minister has no confidence in the board and staff of the commission. As chair, I take responsibility for that, and have stepped aside so that the minister can appoint someone whom she assesses will be able to do a better job."^[49] A few days later, the minister announced the appointment of Annette King as an interim chairperson, and said: "I'm keen to see a broadening of skills to include people who have been at the coalface and understand the reality faced by those people at the coalface".^[50]

An editorial in the Otago Daily Times, on the same day, read:^[51]

It beggars belief that more than seven years on from the most damaging event – Christchurch's deadly 22 February magnitude-6.3 quake – there are still residents waiting for their claims to be completed. It is a disgraceful state of affairs, particularly when EQC was established to provide a rapid, comprehensive recovery from disaster. These quakes were its first really big test – and it failed. There are still more than 2600 claims outstanding out of more than 470,000".

Public inquiry

In November 2018, then Minister Megan Woods announced an independent public inquiry into EQC's handling of the Canterbury earthquake claims chaired by Silvia Cartwright.^[52] Cartwright's report, released in April 2020, found that EQC was poorly prepared for the Canterbury earthquakes. She made a number of recommendations about clarifying EQC's role and improving its processes for claims handling and communicating with claimants.^[53][54] Cartwright said:^[53]

I fully accept that staff, managers and the board of EQC faced an overwhelming task from September 2010, made significantly worse by the ongoing major earthquakes that ensued, an absence of clear prior direction from government, added responsibilities and inadequate internal systems. In the circumstances, EQC's commitment and aspects of its response are commendable. It is necessary, however, to emphasise that its advance planning had many inadequacies, as did the undertaking of its functions after the major events began. The affected public has borne the burden of this.