EQC has had nearly 2300 claims from after flood and cyclone, and the number is still rising
Friday, 17 February 2023
Flood and cyclone damage claims are rising for Toka Tū Ake The Earthquake Commission, but with some homeowners still cut off, it may be some time before the final count it in.
On Friday morning, the commission (EQC) had received 2288 EQCover claims through private insurers for damage caused by flooding in late January, and Cyclone Gabrielle.
In the event of a flood, EQC covers damage to land within 8 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.
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The cost of claims will be met from reserves in the Natural Disaster Fund, which currently has just over $300 million in it.
On February 3, when EQC had had 615 claims, Earthquake Commission Minister Deborah Russell said the “best estimate” was that they would not exhaust EQC’s Natural Disaster Fund.
After the release of the latest claims figures by EQC, Russell said it was still too early to tell whether $300m would be enough to pay all the claims.
The Government guarantees the Natural Disaster Fund, and in the event of a shortfall, provides funds to pay claims.
“It really is too early to tell, we understand many people haven’t been able to get back to their homes to assess damage, and communications are restricted in some places,” Russell said.
“It will be difficult to know the full scale, and costs, across the North Island until Cyclone Gabrielle has passed and the recovery begins,” she said.
“Claims are still coming in, and it is very difficult to estimate land damage before assessments are made.”
“The message to communities is that the EQCover Scheme is here to help, you have plenty of time to get a claim in with your insurer, look after yourselves and your whānau, and put your safety first.”
EQC has reinsurance, but has to pay the first $1.75 billion of costs in any event before its reinsurers have to pay it any money.
The Natural Disaster Fund was in the process of being recapitalised after being depleted to pay claims after earthquakes in Canterbury and Kāikoura.
Homeowners contribute to the fund through levies charged on their house insurance policies.
Asked if the levies may now need to rise, Russell said “levies are set to cover the estimated long-term costs of the scheme, including major events such as these.”
The levy is reviewed from time to time, she said, at a minimum of once every five years.
“Government has recently doubled of the EQCover building cap and amended the EQC levy from October 1, 2022. This means we will have more levies coming into the Natural Disaster Fund to reflect the Government taking on more risk for natural disaster damage,” she said.
Homeowners have been facing large rises in their house insurance costs, partly as a result of the increase in EQC levies.
But private insurers have also been increasing their premiums in response to rising construction costs, and an increase in extreme weather events.
Insurer IAG told investors on the ASX sharemarket earlier this week that it was forecasting a double-digit percentage increase in the premiums it collected from households.