MEDIA RELEASE 6 August 2014

Canterbury Earthquake Insurance Settlements Top $12 Billion Insurance payouts for Canterbury earthquake claims has topped $12 billion, according to the Insurance Council of New Zealand. In line with insurer projections, 2014 looks set to be a watershed year for the Canterbury earthquake insurance claims as 80% of commercial claims and 66% of all residential claims (over cap and out of scope) have now been fully settled. At the end of June 2014, private insurers had paid out $7.7 billion in commercial claims and $4.4 billion in settling residential claims, totalling $12.1 billion. “Insurers  are  currently  paying  out  $11  million  a  day  to  get  Cantabrians  back  into  their  homes   and  enabling  businesses  to  move  forward,”  says  Insurance Council Chief Executive Tim Grafton. Last quarter saw a major ramp up in progress with 1,517 over cap claims settled, double the previous quarter.  That’s  17  claims  s ettled daily and insurers handing over 43 repaired or newly built homes weekly to their customers. “The  settlement  of  Canterbury  earthquake   residential  insurance  claims  has  definitely   reached a turning point with 50% of all over cap claims now fully settled and 72% of the out of  scope  claims  c ompleted,”  he  says. At the end of the June quarter, insurers had 22,739 dwelling claims over the $100,000 plus GST EQC cap, according to the Canterbury Earthquake Recovery Authority (CERA) survey, 284 more than the March quarter. “Private  insurers  have  reached  the  halfway  mark  by  fully   settling  11,392  over cap dwelling claims,  including  the  completion  of  2,203  rebuilds  and  major  repairs,”  says  Mr  Grafton. Of the 11,347 over cap claims remaining, 8,110 insurer-managed rebuilds and repairs are in progress: 1,611 (20% of 8,110) are currently under construction; 442 (5%) in consenting with

1|Page

a local authority or government agency; 1,089 (13%) under contract (when a building contract has been signed by the customer but work on site has not yet started). The balance of insurer-managed major repairs and rebuilds are in pre design (scoping or collection of technical data), detailed design (with a designer/architect) or pricing (tender or pricing for construction). Of the 11,347 over cap claims still to be fully settled, 1,218 are customers still undecided about their settlement offer and 1,169 have yet to be given a settlement option. In the previous quarter there were 2,876 in these categories “The  20%  drop  in  the  number  of  customers  undecided  or  with  no  offers,  represents  the   substantial effort by insurers to progress  c laims  that  may  have  previously  been  stuck,”  s ays   Mr Grafton. “The  success  of  the  Residential  Advisory  Service in providing independent advice and the role community groups play in supporting residents, particularly those in vulnerable circumstances, has undoubtedly contributed to moving claims  forward,”  says  Mr  Grafton. The CERA survey also confirms that 9,189 claims were cash settled with a further 850 awaiting  their  agreed  cash  s ettlement  to  be  finalised.  It’s  important  to  note  that  cash   settlement can include houses that have been built or are under construction outside of the insurers’  project  management  offices. “In  spite  of  insurers  receiving  over  700  newly  over  cap  dwelling  claims from EQC this year, insurers are still confident that almost all major repairs and rebuilds will be completed by the end  of  2016,”  says  Mr  Grafton. There were 64,320 out of EQC scope claims (e.g. pathways, driveways etc.) with 46,317 (72%) now fully settled. A further 9,112 (14.2%) are with PMOs for completion and 8,739 (13.6%) have agreed external resolution but not yet finalised. However, Mr Grafton cautions that while insurers have their eyes firmly fixed on the end game, it’s  important  stakeholders  and  key  partners  don’t  go  into  a  second  half  lull. “Some  headway  has  been  made with complex multi-units where insurers and other parties are finding pragmatic solutions but there are still many complicating factors outside the control  of  insurers  that  could  hinder  the  pace  of  progress,”  he  says. Land repair, retaining walls, Port Hills mass movement areas, customers delaying decisions, the judicial case on EQC compensation models for land with increased vulnerability to

2|Page

flooding (IVF) and liquefaction (IVL), contaminated land and flood zones are just some of the issues still to be fully addressed. “We’re  also  still concerned about irresponsible advocates hyping up customer expectations, encouraging them to prolong their settlement by taking court action when there are free services and processes available to provide advice and facilitate  dispute  resolution,”  says  Mr   Grafton. ENDS Canterbury Earthquake Insurance Claims Key Statistics 2nd Quarter (June) 2014 Insurance Claims Settled $12.1 billion in Canterbury earthquake claims paid out by insurers at the end of June 2014: $7.7 billion in commercial claims $4.4 billion in residential claims Over Cap Claims

Previous Quarter (March 2014)

22,739 total number of Over Cap Claims at end of June 2014:

22,455

11,392 (50%) fully settled o 2,203 rebuilds/major repairs completed o 9,189 cash settled

9,875 1,681 8,194

11,347 (50%) remaining: o 8,110 rebuild/repair in progress: 1,611 (20% of 8,110) under construction 442 (5%) in consenting 1,089 (13%) under contract Remainder in pre design, detailed design or pricing o 850 awaiting cash settlement o 1,218 undecided (5% of total over cap claims) o 1,169 no offer (5% of total over cap claims)

12,631

1,508 1,368

Out of Scope 64,320 out of scope claims: 46,317 (72%) fully settled 9,112 (14.2% ) with PMO for completion 8,739 (13.6%) agreed external resolution but not yet finalised 152 (0.2%) still to be sent to PMO

Contact

Tim Grafton, ICNZ Chief Executive (04) 495 8001 (027) 270 9084

Samson Samasoni ICNZ Communications Manager (021) 852 083

3|Page