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  • New Zealand: Type and timing of insurance pay-outs after the Canterbury earthquakes were significant in the recovery of residential areas and businesses
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New Zealand: Type and timing of insurance pay-outs after the Canterbury earthquakes were significant in the recovery of residential areas and businesses

Source(s):  Resilience to Nature's Challenges

Research into Earthquake Commission insurance pay-outs after the Canterbury earthquakes shows that their type and timing affected whether residential areas and businesses were able to recover.

The 2011 Canterbury Earthquake was the most insured earthquake in the world, with 98% of Christchurch properties being insured when it occurred. Yet the public’s view of the way our public-private insurance system functioned in the aftermath of the quake is generally not positive.

Researchers from Resilience to Nature’s Challenges have been investigating the role of insurance after the 2010-2011 Canterbury earthquakes, to better understand what worked and where the system failed.

The team found that payments made by the Earthquake Commission (EQC) assisted with the city’s recovery. Professor Ilan Noy, lead researcher for the project, said “insurance payments were staggered over 5 years, which gave us the opportunity to identify their local impact.” For every 1% increase in insurance payment for building damage, economic recovery increased by 0.36%. “This is the first time, as far as we know, that detailed post-catastrophe insurance payments have been empirically linked with better local economic recovery,” said Noy.

However, the type of insurance pay-out received affected residential recovery. Some homeowners received their payment from EQC in cash, while others had their houses repaired through the managed repair programme. This programme was offered for claims between $15,000 and $100,000, and involved building repairs being organized and carried out by EQC contractors, rather than the homeowner. The investigation found that cash payments contributed more to local recovery than the managed repair programme, and, not surprisingly, delayed payments contributed less.

In separate research looking at commercial insurance, the team found that businesses with insurance who were paid promptly recovered much better than those without insurance. More surprising is their finding that there was no significant difference in the recovery of those businesses who had insurance, but whose payment was delayed, and those who had no insurance at all. “As in the case of the EQC residential insurance as well, this highlights the importance of timely payments.”

The work is ongoing, with the next phase of the project investigating Christchurch’s Residential Red Zone programme. “We want to understand why Red Zone property owners made the decisions they did, what happened to them after they left, and learn from this programme for future ‘managed retreat’ plans elsewhere in NZ.”



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  • Publication date 17 Sep 2018

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