Reforming the Earthquake Commission


So, the Earthquake Commission Act is up for major changes. Well done. Someone has finally realized the Act of Parliament that governs how the Earthquake Commission functions is in dire need of an overhaul. Now that one is going to happen, will the Government get it right?

The Earthquake Commission Act was drafted in 1993 and became live on 01 January 1994. Prior to that there had been the Earthquake and War Damages Act of 1944, which was amended in 1951, 1964, 1967, 1979, 1983, 1985, 1986, 1987, 1988 and again in 1991. The Hawkes Bay earthquake of 1931 was dealt with by two separate Acts of Parliament specific to that event. The Earthquake Commission Act was amended in 1998. And then it sat, for twelve years until the ground moved at 0435 hours on 04 September 2010.

In defence of the Earthquake Commission, despite its woeful under performance in the 2010 earthquake, no one could have really foreseen the nature of the 22 February 2011 Christchurch earthquake. No one could have really foreseen the nearly four fold increase in claims or that there would be further damaging aftershocks on 13 June and 23 December 2011.

That said, the management of their response was archaic. Right from a few days after the 04 September 2010 earthquake, it was blatantly obvious that the Earthquake Commission was overwhelmed. They were simply not resourced or trained for dealing with an event of this magnitude. However, the Earthquake Commission’s failure to cope was just one aspect of a much bigger and perhaps institutionalized problem. Another was having failed to cope, in some respects the Earthquake Commission then failed to properly indicate the magnitude of the problem. If the Chief Executive had said, “look we cannot cope – we’re overwhelmed and need emergency assistance, bringing sufficient resources to bear”, it would have been an honest admission.

So, what is the new legislation proposing to do and will it work?

The Government ordered a review of the model in 2012, but in February 2015 Minister for Earthquake Recovery Gerry Brownlee said that only minor changes would be made, which failed to impress insurers. A more recent paper released last week however suggests significantly larger changes. The major ones are:

  • Claimants will not have to lodge with the Earthquake Commission
  • Raising the pay out cap from $100,000 to $200,000

This Act of Parliament has some significant challenges to overcome. It must first acknowledge the failings of the Earthquake Commission in the Canterbury/Christchurch earthquakes, not least:

  • The appalling waits that still continue for some households in damaged properties to settle and the failure/refusal to set time limits – will court action be an option if a failure to settle in a realistic time frame be an option
  • The inattention given to the elderly, the sick and the vulnerable whom most rational minded people would not argue against being given higher priority for settlement of claims – a 92 year old pensioner in a bung flat waiting four years is frankly criminal in my book
  • Sorting out the institutionalized mess that is senior management

Whilst these issues cannot be resolved by the Act itself, the Act will hopefully create a legal environment that prevents these and other issues from flaring up again. The clock is ticking, not least because nobody will know until it happens how long we have until the next earthquake, where it will hit and how big it will be. And will New Zealanders be so tolerant if these issues are not addressed before then? I doubt it.

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