Publications
Annual Report
2007-2008
Statement of Service Performance 2007-2008
Output Class 1 - Claims Handling and the Catastrophe Response Programme
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 and through that to the Government’s outcome of Safer communities and rapid recovery from natural disasters.
Performance targets and results- The cost of maintaining the catastrophe response programme is kept within the authorised budget.
Achieved. Overall programme came within the authorised budget but event-related costs, (printing, communications and temporary claims staff expenditure) were higher than projected. - Arrangements are completed by 31 March 2008 to sustain the service and development of EQC’s Minerva suite of computer applications.
Partially achieved. Agreement for continuing service has been reached but moving Minerva to a new platform will be completed by 31 December 2008. - EQC’s new claims management computer application is implemented by 31 March 2008, and passes the acceptance testing and capacity testing specified in the contract.
Achieved. New claims management system went live on 17 March. - The availability of resources and contracts for post-event supply are checked on an annual basis as specified in the catastrophe response management manual.
Achieved. Annual reviews undertaken for all contracts. - EQC has a catastrophe response programme in place to ensure that systems are always available. Tasks will be completed as specified in the schedule of training, testing and exercises produced each year. Schedule of training, testing and exercises interrupted due to the demands of running the Northland, Invercargill and Gisborne support centres. These operations provided opportunities to practice and test the programme as well as on-the-job training for all the skill-sets involved (management in the field, loss adjusting, claims administration, damage estimation and call centre operations).
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.
Through its advocacy of, and investment in, science and engineering research, EQC contributes to natural hazard risk assessment and disaster reduction 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 hazard risk, the 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. All research projects are progressing well within agreed budget and time limits. - Each peer review of completed projects results in a minimum assessment of “satisfactory”.
Achieved. Peer reviews received to date are all satisfactory or above. - The “It’s Our Fault” project to review the earthquake and tsunami hazard of the Wellington region achieves the contracted milestones and targets.
Achieved. The review of Wellington’s seismic hazard and risk is progressing well, with all contracted milestones achieved during the year. - Results of research funded by EQC are disseminated to the research, planning, construction and recovery sectors within two months of completion of satisfactory peer review. Develop and document an improved framework to encourage the transfer of EQC-funded research into practice.
Achieved. A study of EQC’s research dissemination and archiving practices resulted in an improved framework to enable EQC-funded research to become better known. - The university-based teaching and scholarship programmes sponsored by EQC meet contracted requirements.
Achieved. EQC’s university-based teaching and scholarship programmes have contractual arrangements specifying EQC’s requirements and these have been fulfilled. - Establish a process to monitor capability requirements for disciplines identified within the EQC research strategy.
Partially achieved. EQC has held discussions with relevant parts of the research sector and other government agencies to develop its understanding of strategic research capability needs. - GNS Science annual plan for GeoNet is agreed by EQC by 30 June 2008. The plan includes the design, operation and maintenance of a national hazard monitoring system.
Achieved. The development and rollout of GeoNet is on time and on target. The workplan for 2008/09 has been received and approved. Preparations are underway for the second international strategic review of GeoNet which is to be held in late September 2008. - EQC monitors the timeliness and expenditure of GeoNet on a quarterly basis to ensure that the project is meeting the time and budget criteria of the agreement.
Achieved. The project has kept to agreed time criteria and has come within one percent of its agreed budget.
Output Class 3 - Public education
This output class has two elements:
- Public education about seismic hazards and methods of reducing or preventing seismic disaster damage;
- Public education about EQC’s role and the importance of having adequate insurance on their 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.”. 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 preventative steps to mitigate natural disaster damage has increased in the year to 30 June 2008.
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 0.7 percentage points from 44.6% to 45.3% over the course of the year. - The percentage of New Zealanders who understand EQC’s role has increased in the year to 30 June 2008.
The Nielsen surveys show that the percentage of New Zealanders who understand EQC’s role has decreased by 2.4 percentage points during the year, moving from 66.6% to 64.2%. - Public understanding of the insurance under the Act has increased in the year to 30 June 2008 as shown by evaluation of social marketing efforts.
The Nielsen surveys show that awareness of EQC’s insurance role has decreased by one percentage point to 64% 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 condition 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 disasters 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. - EQC will seek formal feedback from a key stakeholder each year. Amount of advice sought didn’t warrant EQC undertaking this exercise.
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. This output class 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
- EQC reviews its reinsurance programme on an annual basis to ensure it still provides optimum value and achieves the objectives set for it.
Achieved. The reinsurance committee reviewed the programme and the Board approved the reinsurance plan after consideration of a paper on reaching a sustainable size for the Natural Disaster Fund. - The reinsurance programme reduces the net risk to the Natural Disaster Fund and the Crown.
Achieved. Computer modelling shows the reinsurance programme for the 2008/09 year reduces the risk of the Fund falling to zero in any year by 80% and of falling below $2 billion in any one year by 50%, compared to having no reinsurance in place. - The 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.
Asset class
Actual return
Benchmark
NZ Government Stock 9.1%
9.0%
NZ Government Inflation-Indexed Bonds 5.2%
5.2%
Bank Bills (Registered Certificates of Deposit) / Treasury Bills
8.6%
8.8%
Passive Global Equities -9.1%
-9.3%
Active Global Equities
-7.7%
-9.3%
Total Portfolio*
3.3%
3.2%
* The target total portfolio return is 1% over the NZGS index return, over a rolling 10-year period. The structure has not been in place long enough to compare 10-year returns. For the four years to 30 June 2008 the actual total portfolio return was 6.0% versus the target of 7.0%.
- In conjunction with its consultants, EQC reviews its investment structure and programme on an annual basis to ensure it is being managed in accordance with best practice and is aware of any developing trends.
Achieved. An additional investment management position for the Commission has been created. - By December 2007, EQC’s responsible investment policy has been formalised and posted on to the website and a decision has been made about EQC’s signing up to the United Nations Principles for Responsible Investment (UNPRI).
Achieved. The EQC Board approved the responsible investment policy including resolving to become a UNPRI signatory on 6 December. The policy was posted on the EQC website immediately thereafter. - EQC’s annual report includes comment on the extent to which social, ethical and environmental issues have been considered in EQC’s investment process and discloses EQC’s proxy voting policy.
Achieved. This annual report meets these requirements. - The programme of insurance company audits and records checking is completed.
Achieved. The programme was completed and 12 audit opinions were received in the year. - Any qualifications in the external auditor’s opinion of an insurance company will be investigated to ensure that the correct premium is being paid to EQC.
Achieved. Three qualified audits investigated and resolved by EQC.