Tuesday, 12 March 2013

EQNZ Lesson 1 for Wellington: Fix EQC

It's too late for policy changes to do much for Christchurch. But the Alpine Fault's pointed straight at Wellington. The quake's hitting there will be bad enough; a few policy changes could avoid exacerbating the damage.

Lesson One from Christchurch should be that EQC really should never have had the job of assessing house damage. It should have no role in repairs, in project management, or, really, anything other than writing cheques.

When #EQNZ Wellington hits, from the homeowner's perspective, it should be as though EQC doesn't exist. Instead, the private insurer should simply send its assessment to EQC for coverage of the below-cap damages: EQC then effectively simply covering a high deductible. EQC could do some random audits to check if any of the private insurers were making a habit of getting all their clients a house tidy-up where there wasn't really any damage, but it really oughtn't otherwise be involved.

Here in Christchurch, because EQC and Fletchers are severely competence-constrained, they decided it was too complicated to let homeowners add at the homeowners' own cost insulation into the walls when the wall linings were already being torn out for repairs. In the last month they've reversed that decision, rightly outraging those homeowners lucky enough to have completed their repairs but who missed out on getting other repairs done.

Asbestos isn't uncommon* in houses of a particular age here. Where the quakes damaged the asbestos, the home repairs have it taken out as part of the insured claim. But where homeowners wish to have the rest removed at the homeowners' own cost, they're being barred from having it done with the rest of the repairs. EQC is right that while the material is undamaged, it is entirely harmless. But the marginal cost of removing this stuff is much lower while everything else is opened up, some future quake could release asbestos fibres, and having any asbestos in a house makes other home repairs more complicated - you don't particularly want to drill into an asbestos sheet by accident.

The constraint seems to be EQC's worry that asbestos contractors' taking an extra day or two on minor jobs holds them up from hitting other jobs. Alternatively, letting asbestos contractors' wages be bid up with demand induces more asbestos contractors' to move into town to get the job done.

This kind of nonsense was one reason we went for an opt-out builder; we're still hoping to get our work done in May-June.

It's much too late to get this part fixed for Christchurch. But hopefully somebody's doing it before Wellington gets its shake.

* I'm still hoping 3-d bioprinted lungs are available in 40 years' time. I'd be pretty surprised if there weren't an #eqnz mesothelioma hit waiting for folks who were here through the dusty times post-quake.


  1. Goota say - while not personally affected by the earthquake, I thought you made so many good point - especially the one about people not having to deal with EQC, after-all at heart, they are just a re-insurer. But - is there a problem with this proposal if most peoples damage is to their land rather than their buildings. (Insurance companies dont insure land but EQC does). Also wondering if the system needs to be made a little more fair by requiring people with just land and no buildings to pay EQC levies also (At the moment EQC only get paid if you have an insurance policy and people dont have insurance policies for land alone) - maybe through their rates?

  2. I've seen enough commenters in enough places claiming to have bought insurance on bare land that it has to be possible. But it's not something that's currently obvious to do.

    1. Make EQC premia scale with value at risk: houses with $10k in contents insurance have less risk than houses with $150k in contents.
    2. Coordinate with insurers on publicising bare-land insurance packages.
    3. Make sure everything is experience-rated for actual damage in this last quake: we know a lot more know about liquifaction risks and the like.