Tower sues EQC for $80 million for fixing earthquake-damaged Canterbury homes

Monday, 30 March 2020

Insurers believe the EQC owes them money for undertaking repairs the state-run natural disaster insurer was obligated to pay.

Tower Insurance is suing EQC for more than $80 million it spent fixing earthquake-damaged homes in Canterbury.

Following the Canterbury earthquakes an unprecedented number of claims were lodged with the EQC, which resulted in significant delays for customers, Tower chief executive Richard Harding said.

But rather than waiting for EQC, Tower worked with its customers to rectify land and building issues that should have been completed and paid for by the EQC, Harding said.

Tower was not the only insurer to do so, and believed at the time that EQC would repay it.

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Harding said Tower had tried to get its money through an 'alternate dispute resolution process' with EQC regarding, but Tower had been disappointed in the lack of progress, and now saw court action as the only viable way forward.

'While we are disappointed that we were not able to reach a resolution with Tower outside of the court system, we were not surprised that they are filing proceedings,' EQC chief executive Sid Miller said.

'We have been working bi-laterally with each of the major insurers, including Tower, and their experts on the matter for some time, and continue to do so.

'These negotiations are commercially sensitive, so we are unable to provide any individual or total figures relating to these discussions.'

And, Miller said: 'We remain confident of our position and will continue to focus on resolving outstanding liabilities with customers, and insurers.'

But Harding said: 'The refusal by EQC to pay what is owed and the resulting court action is just another symptom of an ineffective and inefficient EQC structure that has led to long delays and poor community outcomes.'

'The cost of EQC's inaction impacts all New Zealanders, resulting in higher costs, longer repair times and confusion about who is responsible for what.

'As well as taking this court action, we are strong advocates for insurers to manage major event claims from day one, as was successfully done for the Kaikoura earthquake.

'It is disappointing but not surprising given EQC's history, that we have had to turn to the court system to achieve an outcome that is fair for our customers and shareholders,' he said.

Like all insurers, Tower has switched to remote working in order to be able to deal with customers during the Covid-19 lockdown.

Tower is classified as an essential business, but over 95 per cent of its New Zealand workforce was working from home.

Tower continued to pay claims during the lockdown.

'We have a team in place to help our customers experiencing financial hardship and encourage customers in this position to contact us so we can help find a solution,' Harding said.

'Because of our new working from home arrangements, customers may experience longer than usual wait times on the phone, so if enquiries aren't urgent, please try to chat with us online first.'