This paper measures the longer-term effect of a major earthquake on the local economy, using night-time light intensity measured from space, and investigate whether insurance claim payments for damaged residential property affected the local recovery process. It focuses on the destructive Canterbury Earthquake Sequence (CES) 2010-2011 in New Zealand as a case study. Uniquely for this event, more than 95% of residential housing units were covered by insurance, but insurance payments were staggered over 5 years, enabling the study to identify their local impact.
The study finds that night-time luminosity can capture the process of recovery and describe the recovery’s determinants. It also finds that insurance payments contributed significantly to the process of economic recovery after the earthquake, but delayed payments were less affective and cash settlement of claims were more effective than insurance-managed repairs in contributing to local recovery.