Northern regions in the North and South Islands are the source of most Earthquake Commission (EQC) weather-related insurance claims, the latest study from Motu Economic and Public Policy Research has revealed.
According to Professor Ilan Noy, one of the authors of the study, it is vital to know how weather-related events translate into financial liabilities for the Crown.
“This is the first in-depth analysis of EQC claims for weather-related events and is the beginning of understanding what we may face in the future,” he said.
Between 2000 and 2017, EQC paid out more than 25,000 claims worth nearly $300 million for damages caused by wild weather. The mean amount paid out to claimants was $11,420. The total paid for land damages was $199 million, for building damage it was $93 million and $2.6 million was paid out for damages to contents.
The report suggests around a third of the total number of payouts by EQC were in response to five events: Bay of Plenty and Waikato Flooding (2005); North Island Weather Bomb (2008); Hawke’s Bay Flooding (2011); Tasman-Nelson Heavy Rain and Flooding (2011); and Ex-Tropical Cyclone Wilma (2011).
“Locations with a median income in the top 40% of incomes tend to report more than half of the total claims and pay-outs made,” Noy explained. “This suggests that, after extreme weather events, higher-income families make more frequent use of EQC insurance and claim more payment than the average New Zealand family.”
However, Motu said the reasons for this increase in EQC pay-outs associated with higher income households are not yet entirely clear. They could be associated with better access to the system, higher exposure due to location preferences of various income groups, or higher damages caused by higher asset values (e.g. larger homes and larger housing footprints).
While the average property in NZ is approximately 11km away from the coast, the average property lodging a claim to EQC after a weather event is located only 6km away.
“We are only just beginning to provide insights about the increasing risk that current and future residential areas might face, given the possibility of increasing frequency of extreme weather events,” Noy added.
