A Christchurch couple in a long running dispute over the insurance payout for their earthquake damaged home have reached an out-of-court settlement with Southern Response.
The class action was brought on behalf of former AMI Insurance/Southern Response policyholders who believe the company misled them into settling their claims for less than their policies entitled them to.
The lawyer for Brendan and Colleen Ross, Grant Cameron, talks to Max Towle about the settlement.
This study analyses the Earthquake Commission’s (EQC) insurance claims database to investigate the influence of seismic intensity and property damage resulting from the Canterbury Earthquake Sequence (CES) on the repair costs and claim settlement duration for residential buildings. Firstly, the ratio of building repair cost to its replacement cost was expressed as a Building Loss Ratio (BLR), which was further extended to Regional Loss Ratio (RLR) for greater Christchurch by multiplying the average of all building loss ratios with the proportion of building stock that lodged an insurance claim. Secondly, the total time required to settle the claim and the time taken to complete each phase of the claim settlement process were obtained. Based on the database, the regional loss ratio for greater Christchurch for three events producing shakings of intensities 6, 7, and 8 on the modified Mercalli intensity scale were 0.013, 0.066, and 0.171, respectively. Furthermore, small (less than NZD15,000), medium (between NZD15,000 and NZD100,000), and large (more than NZD100,000) claims took 0.35-0.55, 1.95-2.45, and 3.35-3.85 years to settle regardless of the building’s construction period and earthquake intensities. The number of claims was also disaggregated by various building characteristics to evaluate their relative contribution to the damage and repair costs.
In this thesis, focus is given to develop methodologies for rapidly estimating specific components of loss and downtime functions. The thesis proposes methodologies for deriving loss functions by (i) considering individual component performance; (ii) grouping them as per their performance characteristics; and (iii) applying them to similar building usage categories. The degree of variation in building stock and understanding their characteristics are important factors to be considered in the loss estimation methodology and the field surveys carried out to collect data add value to the study. To facilitate developing ‘downtime’ functions, this study investigates two key components of downtime: (i) time delay from post-event damage assessment of properties; and (ii) time delay in settling the insurance claims lodged. In these two areas, this research enables understanding of critical factors that influence certain aspects of downtime and suggests approaches to quantify those factors. By scrutinising the residential damage insurance claims data provided by the Earthquake Commission (EQC) for the 2010- 2011 Canterbury Earthquake Sequence (CES), this work provides insights into various processes of claims settlement, the time taken to complete them and the EQC loss contributions to building stock in Christchurch city and Canterbury region. The study has shown diligence in investigating the EQC insurance claim data obtained from the CES to get new insights and build confidence in the models developed and the results generated. The first stage of this research develops contribution functions (probabilistic relationships between the expected losses for a wide range of building components and the building’s maximum response) for common types of claddings used in New Zealand buildings combining the probabilistic density functions (developed using the quantity of claddings measured from Christchurch buildings), fragility functions (obtained from the published literature) and cost functions (developed based on inputs from builders) through Monte Carlo simulations. From the developed contribution functions, glazing, masonry veneer, monolithic and precast concrete cladding systems are found to incur 50% loss at inter-storey drift levels equal to 0.027, 0.003, 0.005 and 0.011, respectively. Further, the maximum expected cladding loss for glazing, masonry veneer, monolithic, precast concrete cladding systems are found to be 368.2, 331.9, 365.0, and 136.2 NZD per square meter of floor area, respectively. In the second stage of this research, a detailed cost breakdown of typical buildings designed and built for different purposes is conducted. The contributions of structural and non- structural components to the total building cost are compared for buildings of different usages, and based on the similar ratios of non-structural performance group costs to the structural performance group cost, four-building groups are identified; (i) Structural components dominant group: outdoor sports, stadiums, parkings and long-span warehouses, (ii) non- structural drift-sensitive components dominant group: houses, single-storey suburban buildings (all usages), theatres/halls, workshops and clubhouses, (iii) non-structural acceleration- sensitive components dominant group: hospitals, research labs, museums and retail/cold stores, and (iv) apartments, hotels, offices, industrials, indoor sports, classrooms, devotionals and aquariums. By statistically analysing the cost breakdowns, performance group weighting factors are proposed for structural, and acceleration-sensitive and drift-sensitive non-structural components for all four building groups. Thus proposed building usage groupings and corresponding weighting factors facilitate rapid seismic loss estimation of any type of building given the EDPs at storey levels are known. A model for the quantification of post-earthquake inspection duration is developed in the third stage of this research. Herein, phase durations for the three assessment phases (one rapid impact and two rapid building) are computed using the number of buildings needing inspections, the number of engineers involved in inspections and a phase duration coefficient (which considers the median building inspection time, efficiency of engineer and the number of engineers involved in each assessment teams). The proposed model can be used: (i) by national/regional authorities to decide the length of the emergency period following a major earthquake, and estimate the number of engineers required to conduct a post-earthquake inspection within the desired emergency period, and (ii) to quantify the delay due to inspection for the downtime modelling framework. The final stage of this research investigates the repair costs and insurance claim settlement time for damaged residential buildings in the 2010-2011 Canterbury earthquake sequence. Based on the EQC claim settlement process, claims are categorized into three groups; (i) Small Claims: claims less than NZD15,000 which were settled through cash payment, (ii) Medium Claims: claims less than NZD100,000 which were managed through Canterbury Home Repair Programme (CHRP), and (iii) Large Claims: claims above NZD100,000 which were managed by an insurance provider. The regional loss ratio (RLR) for greater Christchurch for three events inducing shakings of approximate seismic intensities 6, 7, and 8 are found to be 0.013, 0.066, and 0.171, respectively. Furthermore, the claim duration (time between an event and the claim lodgement date), assessment duration (time between the claim lodgement day and the most recent assessment day), and repair duration (time between the most recent assessment day and the repair completion day) for the insured residential buildings in the region affected by the Canterbury earthquake sequence is found to be in the range of 0.5-4 weeks, 1.5- 5 months, and 1-3 years, respectively. The results of this phase will provide useful information to earthquake engineering researchers working on seismic risk/loss and insurance modelling.
The Canterbury earthquake sequence (2010-2011) was the most devastating catastrophe in New Zealand‘s modern history. Fortunately, in 2011 New Zealand had a high insurance penetration ratio, with more than 95% of residences being insured for these earthquakes. This dissertation sheds light on the functions of disaster insurance schemes and their role in economic recovery post-earthquakes. The first chapter describes the demand and supply for earthquake insurance and provides insights about different public-private partnership earthquake insurance schemes around the world. In the second chapter, we concentrate on three public earthquake insurance schemes in California, Japan, and New Zealand. The chapter examines what would have been the outcome had the system of insurance in Christchurch been different in the aftermath of the Canterbury earthquake sequence (CES). We focus on the California Earthquake Authority insurance program, and the Japanese Earthquake Reinsurance scheme. Overall, the aggregate cost of the earthquake to the New Zealand public insurer (the Earthquake Commission) was USD 6.2 billion. If a similar-sized disaster event had occurred in Japan and California, homeowners would have received only around USD 1.6 billion and USD 0.7 billion from the Japanese and Californian schemes, respectively. We further describe the spatial and distributive aspects of these scenarios and discuss some of the policy questions that emerge from this comparison. The third chapter measures the longer-term effect of the CES on the local economy, using night-time light intensity measured from space, and focus on the role of insurance payments for damaged residential property during the local recovery process. Uniquely for this event, more than 95% of residential housing units were covered by insurance and almost all incurred some damage. However, insurance payments were staggered over 5 years, enabling us to identify their local impact. We find that night-time luminosity can capture the process of recovery; and that insurance payments contributed significantly to the process of local economic recovery after the earthquake. Yet, delayed payments were less affective in assisting recovery and cash settlement of claims were more effective than insurance-managed repairs. After the Christchurch earthquakes, the government declared about 8000 houses as Red Zoned, prohibiting further developments in these properties, and offering the owners to buy them out. The government provided two options for owners: the first was full payment for both land and dwelling at the 2007 property evaluation, the second was payment for land, and the rest to be paid by the owner‘s insurance. Most people chose the second option. Using data from LINZ combined with data from Stats NZ, the fourth chapter empirically investigates what led people to choose this second option, and how peer effect influenced the homeowners‘ choices. Due to climate change, public disclosure of coastal hazard information through maps and property reports have been used more frequently by local government. This is expected to raise awareness about disaster risks in local community and help potential property owners to make informed locational decision. However, media outlets and business sector argue that public hazard disclosure will cause a negative effect on property value. Despite this opposition, some district councils in New Zealand have attempted to implement improved disclosure. Kapiti Coast district in the Wellington region serves as a case study for this research. In the fifth chapter, we utilize the residential property sale data and coastal hazard maps from the local district council. This study employs a difference-in-difference hedonic property price approach to examine the effect of hazard disclosure on coastal property values. We also apply spatial hedonic regression methods, controlling for coastal amenities, as our robustness check. Our findings suggest that hazard designation has a statistically and economically insignificant impact on property values. Overall, the risk perception about coastal hazards should be more emphasized in communities.
This study analyses the success and limitations of the recovery process following the 2010–11 earthquake sequence in Christchurch, New Zealand. Data were obtained from in-depth interviews with 32 relocated households in Christchurch, and from a review of recovery policies implemented by the government. A top-down approach to disaster recovery was evident, with the creation of multiple government agencies and processes that made grassroots input into decision-making difficult. Although insurance proceeds enabled the repair and rebuilding of many dwellings, the complexity and adversarial nature of the claim procedures also impaired recovery. Householders’ perceptions of recovery reflected key aspects of their post-earthquake experiences (e.g. the housing offer they received, and the negotiations involved), and the outcomes of their relocation (including the value of the new home, their subjective well-being, and lifestyle after relocation). Protracted insurance negotiations, unfair offers and hardships in post-earthquake life were major challenges to recovery. Less-thanfavourable recovery experiences also transformed patterns of trust in local communities, as relocated householders came to doubt both the government and private insurance companies’ ability to successfully manage a disaster. At the same time, many relocated households expressed trust in their neighbours and communities. This study illuminates how government policies influence disaster recovery while also suggesting a need to reconsider centralised, top-down approaches to managing recovery.
This dissertation contains three essays on the impact of unexpected adverse events on student outcomes. All three attempt to identify causal inference using plausibly exogenous shocks and econometric tools, applied to rich administrative data. In Chapter 2, I present evidence of the causal effects of the 2011 Christchurch earthquake on tertiary enrolment and completion. Using the shock of the 2011 earthquake on high school students in the Canterbury region, I estimate the effect of the earthquake on a range of outcomes including tertiary enrolment, degree completion and wages. I find the earthquake causes a substantial increase in tertiary enrolment, particularly for low ability high school leavers from damaged schools. However, I find no evidence that low ability students induced by the earthquake complete a degree on time. In Chapter 3, I identify the impact of repeat disaster exposure on university performance, by comparing outcomes for students who experience their first earthquake while in university, to outcomes for students with prior earthquake exposure. Using a triple-differences estimation strategy with individual-by-year fixed effects, I identify a precise null effect, suggesting that previous experience of earthquakes is not predictive of response to an additional shock two years later. The final chapter investigates the impact of injuries sustained in university on academic performance and wages, using administrative data including no-fault insurance claims, emergency department attendance and hospital admissions, linked with tertiary enrolment. I find injuries, including minor injuries, have a negative effect on re-enrolment, degree completion and grades in university.
