The situation in Christchurch has now become very clear.
Constant flooding with the suffering of affected people. Insurance companies running for shelter by not providing insurance for flooding.
The insurance sector has a plan for these areas to increase the cost of insurance or not to provide insurance cover on the long run. http://www.nzila.org/documents/130905-lucas.pdf
People that have suffered the hardship of the earthquakes, still living in damaged houses through the fourth winter suffering constant flooding and further loss of property due to high insurance excesses or no insurance cover. Most of these people do not have any certainty about their future, not able to make any decisions and it is fair to say that they are in captivity by the recovery authorities.
We are having one serious rain event today, we may have relief on Wednesday but there is another large rain event on the horizon in the following days.
The advisors to the government and to EQC come from the insurance sector. I believe how the recovery is handled reflects that quite clearly.
One of the most significant tools of the insurance industry is risk transfer. The insurance sector trades with risk and they are fully aware of the cost of risk.
They way the Risk Transfer works is that the risk that we insured for is not mitigated. Residents are left with the risk.
The risk is varying, land damage, rock fall, risk of flooding, risk of subsidence, risk of foundation failure, risk of illegal or substandard repairs and house failure.
Due to building regulation changes Geotechnical, Structural engineers, quantity surveyors and architects have no liability when it comes to building contracts. The public is not aware of this fact and the blind trust of the public is a known factor.
It is interesting that this statement was made by Hon Maurice Williamson before changes to the building act were proposed.
“Residential consumers are vulnerable -they rarely commission building work, and they have limited knowledge of the associated risks and the options for managing these.”
This was followed by the changes of the building act and the publication of the MBIE guidelines.
I ask who’s interest is at heart?
Another issue is that while stated that houses should be raised to pre earthquake levels or to the district plan requirements, the fact is that the building regulations have been bent so much that insurance companies are getting away with transferring this flood risk over to the residents. This is due to the actions of the government. Just from looking around the eastern suburbs hardly any houses have had their floor levels raised despite many properties having subsided below high tide. (MHWS)
The land claims settlement is another can of worms, the government has used legislation to instruct devaluation of properties in Christchurch.
Interestingly the worst affected areas of land damage have suffered the most significant devaluation.
It is specifically stated by Quotable Value that this updated rating value is not earthquake related damage and is only based on recent sales.
EQC desires to use this devaluation to determine their cap payment to the worst affected people. This is like devaluing a car after a loss and settle the insurance claim based on the value of the damaged car. While nothing has been released so far on how the land claims will be settled this is how this looks to me.
In my opinion EQC has failed their obligations to deal with the natural disaster. They have left people in un acceptable risk caused by the natural disaster. The organization seems to be driven as a hard core profit making business while it is is set up as a recovery organization. That has become obvious. EQC and the Government are responsible for this situation but sadly not even the opposition stands up and points this out to media. Colossal failure and mismanagement.
This is not a local Christchurch problem but reflects how the recovery authorities have taken the transfer of risk to far.
Enough is Enough!
The media and the public in New Zealand seems to be blind to the precedent that is being set for handling of natural disasters for the future of New Zealand. This is not our last disaster.