Publications
Annual Report
2006-2007
Statement of Service Performance 2006-2007
- Output Class 1 – Claims Handling and Catastrophe Response
- Output Class 2 – Research
- Output Class 3 – Public Education
- Output Class 4 – Policy Advice
- Output Class 5 – Management of the Natural Disaster Fund
- Good Employer Compliance
- Output Expenditure
Output Class 1 – Claims Handling and Catastrophe Response
This output class comprises the maintenance of EQC’s state of readiness to meet the requirements of the Crown for the compensation of residential property owners following a natural disaster and the incorporation of this readiness, so far as is possible, into normal daily operations.
It contributes to the impact of Having a catastrophe response programme that delivers adequate claims handling capacity after a natural disaster, and through that to the Government’s outcome of Safer communities and rapid recovery from natural disaster.
Performance targets and results
- The cost of maintaining the catastrophe response programme is kept within the authorised budget.
Achieved. The overall catastrophe response programme came within the authorised budget. Legal and travel expenses were higher than projected due to development of the new claims management system and the travel associated with natural disaster events in Auckland and Northland.
- EQC’s systems successfully withstand a programme of capacity testing.
Achieved. One claims computer load test was successfully conducted. Training of site managers, team leaders, loss adjusters, claims administrators, repair estimators and call centre operators carried out. The demands of both the Northland operation and the development of the new claims management system interrupted the scheduled capacity testing and training and exercise programme. However, the establishment of a temporary field office in Northland provided a real environment in which to test the programme.
- The availability of resources and contracts for postevent supply are regularly checked.
Achieved. There are contracts in place with 15 suppliers specifically for catastrophe response purposes. Annual reviews undertaken for all contracts.
- Systems are duplicated and regularly backed up.
Achieved. The claims and office computer systems are located in Wellington and replicated in Auckland. Both systems have internal mirroring capability which provides local redundancy. Data transfer between locations is continuous.
Contracts are signed up with multi-site suppliers or alternative suppliers are arranged to ensure backup of goods and services.
- Maintain claimant service satisfaction levels, as measured by postal surveys based on recently settled claims, at as minima:
For claimants whose claims were accepted 80%
For claimants whose claims were declined 75%
Achieved. The Commission carries out independent satisfaction surveys of its claimants every quarter. Satisfaction for claimants whose claims were accepted – 83%, satisfaction for claimants whose claims were declined – 80%
.Output Class 2 – Research
This output class includes research in fields relevant to natural disaster damage, methods of reducing or preventing natural disaster damage, and the insurance provided under the Earthquake Commission Act. It reflects EQC’s functions under section 5(1)(e) of the Earthquake Commission Act.
Through its advocacy of, and investment in, science and engineering research, EQC contributes to hazard assessment and disaster prevention in New Zealand. The Commission’s research activities contribute to the impact of Sustaining capability and completing research in order to reduce the risk of the hazards EQC insures against. By contributing to a reduction in risk hazard, research helps to reduce the Crown’s liabilities and protect its assets and helps to make New Zealand communities safer from natural disasters. Research into construction and engineering methods can also have economic spin-offs and contribute to a knowledge-driven economy.
Performance targets and results
- The planned programme of investment in research is accomplished.
Achieved. Both the biennial and student programmes were fully subscribed. All research projects from these programmes due for completion during the year were completed.
The “It’s Our Fault” project to improve understanding of the Wellington region’s vulnerability to large earthquakes commenced with co-funding from Wellington City Council and ACC.
- Peer review of completed projects results in minimum assessments of satisfactory in each case.
Achieved. Peer reviews received to date are all satisfactory or above.
- Results of research funded by EQC are applied to planning, construction and recovery practices.
Achieved through workshops, conferences and seminars held; projects aimed at improving the national capability to respond; a project on improving the overall functioning of the system of landslip risk management; and support for Standards New Zealand, the New Zealand Society for Earthquake Engineering and Lifelines groups (both regional and national).
All activities met the requirements of their respective funding agreements.
- Results of the university-based teaching and scholarship programmes sponsored by EQC meet agreed requirements.
Achieved. EQC’s university-based teaching and scholarship programmes have contractual arrangements specifying EQC’s requirements and these have been fulfilled.
- Staffing strengths within the disciplines supported by EQC sustain the delivery of quality research and its application.
Achieved. The university-based teaching programme supports lectureships at Victoria (seismic studies), Massey (natural hazards planning) and Canterbury (earthquake engineering) universities. A new partnership with the University of Auckland that supports research on volcanic risk, geotechnical engineering and earthquake engineering was launched in April.
- GNS Science annual plans for the development and utilisation of GeoNet meet agreed requirements.
The development and rollout of GeoNet is on time and on target. The workplan for 2007/08 has been received and approved. Progress achieved during the year included extension of the national seismograph network, upgrades to the national earth deformation survey network and improvements to volcano surveillance throughout the North Island.
- The GeoNet project keeps to agreed time and budget criteria.
Achieved. The project has kept to agreed time criteria and has come within 1% of its agreed budget.
- GeoNet outputs improve national readiness capabilities and become integral to civil defence and local authority plans and recovery processes.
Achieved. GeoNet reports are delivered via email, fax and SMS to the Ministry of Civil Defence and Emergency Management, local authorities and other interested parties. Surveillance of volcanoes and monitoring of selected large landslips is also carried out through GeoNet. The GeoNet website won the Computerworld award for Excellence in the Use of ICT in Government.
Output Class 3 – Public Education
This output class has two elements:
- Public education about geological hazards and methods of reducing or preventing damage caused by them.
- Public education about EQC’s role and the importance of having adequate insurance on residential and personal property.
These outputs reflect EQC’s functions under Section 5(1)(e) of the Earthquake Commission Act: “facilitate research and education about matters relevant to natural disaster damage, methods of reducing or preventing natural disaster damage, and the insurance provided under this Act.”.
The output class contributes directly to the Government’s outcome of Safer communities, because it increases public awareness of New Zealand’s vulnerabilities to natural disasters and the steps that can be taken in the home to mitigate these. It also indirectly contributes to the Government’s outcome of Efficient management of the Crown’s assets and liabilities because the Crown’s fiscal risk is reduced as more households take precautions against damage from seismic events.
Performance targets and results
- The percentage of New Zealand households that have taken preventive steps to mitigate natural disaster damage is growing steadily.
The independent Nielsen quarterly surveys show that disaster mitigation activity (as indicated by levels of secured hotwater cylinders, tall furniture and foundations) has increased by 0.3 percentage points from 44.3% to 44.6% over the course of the year.
- The percentage of New Zealanders who understand EQC’s role is increasing.
The Nielsen surveys show that the percentage of New Zealanders who understand EQC’s role has decreased by 0.2 percentage points during the year, moving from 66.8% to 66.6%.
- Public understanding of the insurance under the Act is improving as shown by evaluation of social marketing efforts.
The Nielsen surveys show that awareness of EQC’s insurance role has increased by 4% to 65% over the past year.
Output Class 4 – Policy Advice
This output class includes the provision of policy advice to the Government on issues related to EQC’s statutory functions, including:
- Natural disaster damage
- Methods of reducing or preventing natural disaster damage
- Government response to disasters
- Relevant risk management issues
- Management of the Natural Disaster Fund and protection of its value
- Terms and conditions of the insurance.
It contributes to all of EQC’s impacts, and through them to the Government’s outcomes of Safer communities and rapid recovery from natural disaster and Efficient management of the Crown’s assets and liabilities.
Performance targets and results
- All requests for policy advice from the Minister and Treasury are met within agreed timelines.
Achieved. All Ministerial enquiries during the year were responded to within agreed timelines.
EQC attended meetings and proffered advice for the Treasury paper “Options to improve insurance coverage for all New Zealand households”.
- Feedback from stakeholders indicates that EQC’s advice is effective in supporting its stated outcomes.
EQC’s input into the Treasury paper received appreciative feedback.
Output Class 5 – Management of the Natural Disaster Fund
This output class involves administration of the Fund, including collection of the premiums payable, and, so far as reasonably practicable, protection of the Fund’s value through the investment of money held in the Fund and reinsurance in respect of the whole or part of the insurance provided under the Act. It reflects EQC’s functions as set out in section 5(1)(b), (c) and (d) of the Act and contributes directly to the Government’s outcome of Efficient management of the Crown’s assets and liabilities.
Performance targets and results
- The reinsurance programme reduces the net risk to the Natural Disaster Fund and the Crown.
Achieved. Computer modeling shows that the reinsurance programme negotiated for the 2006/7 year approximately halved the net risk (ie, reinsurance premiums less reinsurance recoveries) to both the Fund and the Crown, compared to having no reinsurance in place.
- Fund is managed in accordance with the Statement of Investment Policies, Standards and Procedures.
Achieved. This included investing in approved asset classes only, maintaining asset classes within specified ranges, ensuring cash was invested in banks with high credit ratings, receiving compliance and audit reports from custodians and fund managers, and reporting on the Fund to the Board and investment committee.
- Return on investment meets the benchmarks set in the Statement of Investment Policies, Standards and Procedures.
Results:
| Asset Class | Actual Return | Benchmark/Target Return |
| NZ Government Stock | 1.8% | 1.8% |
| NZ Government Inflation-Indexed Bonds | 2.6% | 2.5% |
| Bank Bills (registered certificates of deposit)/Treasury Bills | 7.7% | 7.6% |
| Passive Global Equities | -2.1% | -2.4% |
| Active Global Equities | -4.0% | -2.4% |
| Total Portfolio | 0.7% | 2.8%* |
- The programme of insurance company audits and records checking is completed.
Achieved. The programme has been carried out and all premium inconsistencies discovered have been remedied.
- Manage the Natural Disaster Fund so as to avoid prejudice to New Zealand’s reputation as a responsible member of the world community.
Should an area of concern be identified, in most instances EQC requests that active managers engage with the companies involved and keep the Commission advised of this activity.
EQC has instructed its active managers not to invest in two sectors:
- Companies involved in the manufacture, development or use of anti-personnel mines;
- Companies involved in the manufacture of tobacco products.
EQC’s Board will have a formal responsible investment policy for the Commission in place by the end of 2007.
Good Employer Compliance
Compliance with obligation to be a “good employer”.
EQC has met all the requirements of its equal employment opportunity policy. In addition, as part of its requirement to be a “good employer” the Commission has in place:
- A confidential Employee Assistance Programme provided by a specialist external provider.
- Voluntary membership of the State Sector Retirement Savings Scheme, with the Commission providing a contribution matching any employee contribution to a maximum of 3% (net) of remuneration.
- Allowance for expenditure on staff training based on a percentage of the staff salaries budget.
- The Commission monitors staff turnover and average length of service as an indicator of staff satisfaction.
| This Year | Last Year | |
| Average Length of Service | 7.3 years | 7.4 years |
| Staff Turnover | 2 | 3 |
| Total Staff at 30 June | 21 | 19* |
Output Expenditure
Output expenditure f or the y ear end ed 30 June 2007(1)| Output Class | Revenue | Expenditure | Revenue Budget | Expenditure budget |
| 1: Claims Handling and the Catastrophe Response Programme | Nil | $7.3 million | Nil | $8.4 million |
| 2: Research | Nil | $9.0 million | Nil | $9.0 million |
| 3: Public Education | Nil | $2.7 million | Nil | $3.7 million |
| 4: Policy Advice | Nil | Nil | Nil | Nil |
| 5: Management of the Natural Disaster Func | 130.4 million | $49.2 million | $440.2 million | $53.8 million |