Answers by EQC Feb 2013, what is the progress now and why are the delays.

These questions were asked in December 2012, following answers received from Richard Braddell 1 Feb 2013.
It does not sound like they are making much progress.
As of February 2014 2630 claims are still held in apportionment.

1.       Are there 2770 TC3 claims held in apportionment? (Oct 2012)

All claims for building damage have to be apportioned. There are currently about 2000 TC3 properties where apportionment is required before the claim can be determined as over- or under-cap. In all there have been approximately 28,000 properties with claims in TC3 and 14,000 have been handed to private insurers.


2.       Is the value of these claims on average 150.000, total of over 4bn?

No. The 2000 claims awaiting apportionment all have a damage value of over $80,000, but it is not immediately apparent that damage from any one event is over $100,000 +GST. That is why they need apportionment before a private insurer will accept them, if over cap.


3.       Is it true that EQC claimed this damage from re-insurers last year based on best estimate?

No. We claim on the basis of proved the loss from an event. EQC pays the first $1.5 billion of an event and we draw down from the reinsurers as we prove the loss and settle for the balance of claims from that event.


4.       Is EQC investing these moneys in Government Stock earning interest?

No, EQC is using reinsurance payouts to settle claims and repair houses. You may be confusing these pay-outs with the funds in the Natural Disaster Fund (which is also being drawn down for repairs and claims settlement) some of which were invested in Government bonds.


5.       Did the Government free EQC from interest payments on the overdue payments?

EQC has never had a liability for interest on pay-outs from natural disaster damage.


6.       Are these 2770 TC3 claims in apportionment considered the worst affected in Christchurch?

By definition, the worst affected buildings in Christchurch have been settled by EQC as over-cap, and passed to private insurers for resolution. Properties awaiting apportionment before the claim can be determined as over- or under-cap, are those with damage over $80,000 but where it is not immediately apparent that damage from any one event is over $100,000 +GST.


7.       Is it true that the cost of drilling will take most of these claims over-cap?

No. The actual cost of drilling varies as a proportion of the individual properties’ claims values.

Drilling was dependent on whether there was damage to foundations and the majority of properties in TC3 did not require drilling.  The geotechnical investigations in Technical Category 3 (TC3) were undertaken in order to understand local soil conditions before the foundations of approximately 10,500 homes can be repaired or replaced.

Until drilling data is analysed, it’s not possible to say what these foundation repair costs will be. While it’s likely that TC3 foundations will cost more than conventional foundations, the cost must take damage from one event over the $100,000 +GST cap for the claim to be accepted by a private insurer.


8.       Is it true that the 10% increase in building cost will take most of these claims over-cap?

One of the reasons EQC established the Canterbury Home Repair Programme with Fletcher EQR was to reduce the impact of cost increases in the repair trades by setting ‘rate ceilings’ which reflect normal market costs for building and finishing trades. This has been successful in keeping costs increases to a minimum – in many trades, costs have decreased since 2010.

The reported 10% increase in costs affects predominantly new builds, which EQC is not involved in.


9.       What information is missing to finish these apportionments / settlements?

This varies form case to case, but due to the frequency of earthquakes in 2010 and 2011, the key missing information is usually evidence of damage between earthquakes which helps fix the costs to one event or another. EQC is using a range of tools to manually replicate this information.


10.   Is it fair to say that both EQC and the Government are financially benefitting from the suffering of the worst affected Christchurch residents?

No. EQC has an estimated liability of $12.5 billion of which $1 billion is likely to be met by the taxpayer. Figures for the total cost to the government can be obtained from Treasury, it is substantially more than for EQC alone.


Royal Commission, recommendations and MBIE

The Royal Commission considers that there must be greater focus on geotechnical investigations to reduce the risk of unsatisfactory foundation performance. 

This is my letter to MBIE as I am concerned about these issues.

I have been looking at the Recommendations by the Royal Commission.
One of them is the following.
“Ground-improvement techniques used as part of the foundation system for a multistory building should have a proven performance in earthquake case studies.”

I live on a highly liquefiable land and we have 38m down to gravel. Land measures at 10.7m, highest tide in the area is supposedly at 11.2m
ULS subsidence is measured to be 340-400mm down to at least 20m depth. Lateral spreading 70-200cm.

Are you aware of any ground improvements with a proven performance in earthquake studies that would solve this problem?
Have any tests been made? Are there any solutions?

Then in general for TC3 ground improvements in the eastern suburbs.
In general the depth down to gravel is 30-40m.
Liquefaction induced settlement is down to at least 20m.
Any gravel platform or ribraft solutions on this land is likely to increase the settlement based on houses that have sunk into the ground in these areas.

The geotech reports I have seen so far are not according to any acceptable standard.
Typically assume drained soil, Exclude Liquefaction probability, exclude lateral spreading, assume no building on site, stated preliminary, Exclude the Z factor (seismic risk)
Commonly only calculate settlement down to 10 meters when it is known that subsidence reaches far greater depth.
Designers and engineers are excluded from all liability in the current building act. The only thing that is monitoring them is their own code of conduct.
I think it would be fair to say that these practices are not acceptable by society.
What is MBIE opinion of these practices?
What can be done to stop this?

What ground improvement solutions are proposed for these situations and how have they been tested?
The seismic risk in this area is extreme. Two active fault lines are under these suburbs and we have had a downward tectonic movement here.

I look forward to your response.

Update to come.

Please be careful if your property is subject to Hazards

Please be careful when considering cash settlements if your land is subject to hazards. The revised District Plan may render your land un-usable. The district plan will identify where repairs or rebuilds are allowed and where no development is allowed.

CCC has legal obligations to follow the New Zealand Coastal Policy Statement 2010 – 

The District Plan is Councils ability to limit development in natural hazard areas

This opinion provides advice on the potential liability councils may face as a result of re-drawing hazards lines/zones in coastal areas and flood plains. The advice covers liability risk for councils in terms of the RMA, Building Act and for general information requests under LGOIMA, PIMs and LIMs. The advice also addresses the question of what defines ‘best available information.’

See legal opinion here.

This is likely to affect hundreds if not thousands of homes in Christchurch.

Floor Area of your property

The term floor area has a legal definition as per the New Zealand building code.

“floor area, in relation to a building, means the floor area (expressed in square metres) of all interior spaces used for activities normally associated with domestic living”

This is in harmony with how calculations of “floor area” are on architectural drawings for building work. Commonly information from building plans is used when insurance is arranged. Floor Area is the term used in insurance contracts.

If you have legal plans of your property, (available from Council) you can rely on those figures.

Houses are insured on “Floor Area” not to be confused with area of house. Check your policy.
Having a 100m2 groundfloor and 10m2 room in roof cavity does not require insurance of 230m2 “Floor Area”. 
But 110m2 as per building plans.
House area is something that has appeared after the earthquakes. Check out the ANZ site here, second reference is to the building plans that is the correct one.
Then they offer you a guide to measure the outside.
What is the purpose of a Code of Conduct if they practice in this way.