The Insurance Council of New Zealand (ICNZ) has released a progress update on claims from the July 2021 Westport floods. According to the industry body, around 85% of home contents claims and 97% of motor claims have been fully settled.
During the recovery process, the community and insurance sector faced multiple challenges, such as scarcity of temporary accommodation, a nationwide shortage of building materials, pandemic lockdowns and multiple weather events that have been re-traumatising to many, ICNZ said.
Many home insurance policies have a temporary accommodation allowance, with an average payout of around $20,000, that pays for accommodation while the uninhabitable home is repaired. Due to the lack of suitable accommodation, insurers were flexible in how residents used their allowance, ICNZ said. Some residents chose to pay a daily allowance to friends and family, some rented or purchased mobile homes, and some found rental dwellings.
By the end of January around 65% of Westport home insurance claims were fully settled, while 20% had repairs underway and nearing completion. To date, $13.5 million in home insurance claims have been paid out.
“Insurers have been securing available contractor resources from around the South Island for customers to complete the recovery as quickly as possible,” said Tim Grafton, chief executive of ICNZ. “Given the circumstances, we are pleased with the progress being made in Westport and expect the remaining homes will be completed over the coming months.”
According to ICNZ, around half of homeowners chose a cash settlement from their insurer, allowing them to choose their own contractor and approach to repairs. This allows homeowners to have additional resilience work done, outside of what has been damaged by the flood. These additional works often need consents and additional design work, which is not covered by insurance.
Car insurance claims are close to completed for the Westport event, with 97% of claims settled as of end-January and $1.74 million paid out.
“Insurance only transfers risk and individual householders can’t be expected to build their own flood defences,” Grafton said. “Community-led action involving local and central government is needed to reduce flood risk and make infrastructure more resilient. This is the only long-term solution to reduce further economic, social and environmental disruption as we look to a future where extreme weather events are already becoming both more frequent and severe. We, as insurers, look forward to working with communities to do so.”
