'Best estimate' is that Natural Disaster Fund will have enough cash to cover EQC flood claims, minister says

Thursday, 2 February 2023

Landslides and debris from the weekend’s storm blocked roads in Titirangi, and damaged homes.

Flood damage claims are rising for Toka Tū Ake The Earthquake Commission (EQC), but Earthquake Commission minister Deborah Russell says the “best estimate” is that they won’t exhaust EQC’s Natural Disaster Fund.

At 7am on Thursday, EQC said it had received 615 claims; 486 for land damage only, 48 for damage to buildings, and 81 for damage to land and buildings.

The cost of claims will be met from reserves in the Natural Disaster Fund, which currently has just over $300 million in it.

Russell said: “Claims are still coming in, our best estimate at this time is that while the impacts are devastating on communities, these claims are currently not expected to deplete the fund.”

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EQC is government-guaranteed, so the taxpayer tops it up, should it not contain enough money to pay claims.

In the event of a flood EQC covers damage to land within eight metres of homes, as well as up to 60m for driveways, and services, with private insurers providing cover for home, contents and cars.

EQC’s EQCover also covers damage houses caused by landslips, and it has published a guide for homeowners showing exactly what is covered.

If a house is damaged by a landslip, EQC cover is up to either $150,000 or $300,000 depending on when each homeowner’s policy renewed.

Homeowners’ private insurers pays for any damage to homes above that cap.

Speaking on Thursday, EQC chief financial officer Chris Chaney said: “It’s still a bit early to tell. We will be working with our private insurance partners over the coming days to understand the level of claims with an EQCover element.

“But to note, we expect the majority of claims in this flood event to be related to homes, contents and cars, and therefore covered by private insurance policies.

“EQCover will step in for land damage due to storms and floods, and for home and residential land damage from landslips.”

Even before the Auckland and North Island flooding, the Natural Disaster Fund was depleted by natural disasters including the Canterbury and Kaikōura earthquakes.

Russell addressed the issue of whether EQC levies added to private insurance premiums will have to rise to recapitalise the fund.

“The levy is set at a level to cover the expected long-term cost of the fund. This event is well within the size of events anticipated when the levy is set.”

She said that under the Natural Hazard Insurance Bill, which is before Parliament, the minister responsible for the Earthquake Commission will periodically report on how the EQC scheme is to be funded, and whether changes to the levy are needed.