Canterbury tales: reflections on New Zealand’s most costly nat cat
Canterbury tales: reflections on New Zealand’s most costly nat cat | Insurance Business New Zealand
Technology
Canterbury tales: reflections on New Zealand’s most costly nat cat
“There are still a few hundred properties unsettled”
Technology
By
Daniel Wood
“There are still a few hundred properties unsettled,” said Tim Grafton (pictured above).
Last month, after 12 years in the role, Grafton stepped down as CEO of the Insurance Council of New Zealand Te Kāhui Inihua o Aotearoa (ICNZ).
He was referring to the Canterbury earthquakes in 2010 and 2011. When he took up the CEO job in 2012 it was in the wake of these earthquakes, the most damaging and costliest natural disasters in the country’s history.
Canterbury’s outstanding claims
The impacts continue to this day.
“There are still outstanding claims from Canterbury, largely with the Earthquake Commission (EQC) and an entity that was born out of a failed insurer called Southern Response,” said Grafton, who is now a consultant. “What’s happened there, is that claims have been reopened.”
He said these reopened claims concern properties that were sold after the quakes and were not repaired.
“Then people buying those houses and then being on sold and eventually someone coming along and claiming that the property hasn’t been fixed up,” said Grafton. “Or they’ve found something out that they believe is earthquake damage.”
In 2012, two years after the event, he said the settlement rate for residential was a slow 25%.
“We were still receiving overcap claims from EQC in 2020, nearly a decade afterwards,” said Grafton. “That shows just how bad the system was.”
Canterbury lessons
Claims handling for large scale events, he said, has considerably improved since these earthquakes.
“There’s no way we would be waiting 10 years for the settlements these days,” said Grafton. “We’re 91% through the Auckland Anniversary Weekend flooding and Cyclone Gabrielle events after 12 months.”
What were you doing when the earthquake struck?
At the time of the 2010 earthquake Grafton was executive director of a market research company. Insurance Business asked him what he remembers about the day this nat cat struck?
“It’s quite a vivid memory,” said Grafton. “There was a big event on September 4, 2010, and I’m in Wellington and that earthquake occurred in the early hours of the morning and I have a sister-in-law who lives in Darfield which was the epicentre of the earthquake.”
Ironically, this sister-in-law at the quake’s epicentre was more worried about her brother-in-law in Wellington.
“I remember that she thought ‘What the hell has happened to Wellington if I’m feeling this here’,” said Grafton. “Because Wellington was always thought to be the place that would go – and it will still go at some stage.”
For this first event in a series of earthquakes he said insurers reacted quickly and settled claims rapidly. The nat cat struck in the early hours of the morning, which, he said, explained why there was no loss of life.
Grafton said the February 2011 earthquake, which occurred in the early afternoon, was a different story.
“I can remember the rubble, the people running down the streets with cuts to their heads and things like that,” he said. “I have very vivid memories of the February earthquake.”
Walls falling and liquefaction
He said he also strongly recalls several other earthquakes, including one that struck in June 2012, just before he became the ICNZ CEO.
“I remember a house wall falling down, a wardrobe hanging loose out of the building and experiencing the liquefaction because where we were staying was very close to the Avon river in Christchurch,” said Grafton. ”It can be quite scary.”
During the Kaikoura earthquake in November 2016, he was living in Wellington in an old wooden house built in the 1900s. Grafton said the house “shook violently.”
“Maybe it was the timber that gave it the flexibility but that’s the scariest situation I’ve ever been in,” he said. “The epicentre was 200 kilometres south of Wellington but we had over a billion dollars of losses here in Wellington.”
It was shortly after the Kaikoura earthquake that Grafton said he rang his counterpart at the EQC.
“We got cracking on ensuring that insurers were going to manage their claims not the EQC,” he said.
Thousands of earthquakes in a few years
He said there were so many earthquakes during those years that some people in Christchurch were so accustomed to them that they were able to gauge their magnitude.
“In that period from 2010 to about 2014 there were about 12,000 to 13,000 very small to large earthquakes in the Christchurch area,” said Grafton.
The sheer number of these events was a contributing factor, he said, to the slow settlement of claims.
“The land was still shaking and so people weren’t going to start rebuilding,” he said. “Also, the availability of contract works insurance just wasn’t there because of the high risk that another quake would come along and bring everything down again.”
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