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How Kaikoura earthquake changed insurance response

How Kaikoura earthquake changed insurance response

The 2016 magnitude 7.8 Kaikōura earthquake caused severe damage and disruption in the Kaikōura, North Canterbury, Marlborough and Wellington regions. It was an event that triggered a change in the way EQC responded to natural disasters. Five years on, Chief Readiness Officer Josh Lindsay, who had a lead role in EQC’s response to the Kaikōura earthquake, explains how our learnings have helped shape the way EQC - in partnership with the insurance industry - is now set up to respond to future natural disasters.

Every natural disaster is different, and every community impacted by a disaster has different needs.

The Canterbury earthquakes in 2010/2011 proved that despite best efforts, EQC was not as well equipped as we could have been to deal with a natural disaster event of that size and scale. As an organisation we were accustomed to dealing with around 4000 active claims per year, but now faced an overwhelming 450,000 active claims from that earthquake sequence.

The reality is we struggled to cope under this strain. For our Canterbury customers, who had just had their lives turned upside down, our response added a lot of unnecessary complexities and angst to what was already a stressful time.

We knew we needed to learn from the Canterbury experience and adjust our approach in response to future naturals disasters, so when the Kaikōura earthquake occurred, we embraced the opportunity to adapt our delivery.

The Kaikōura earthquake had some similarities to the Canterbury Earthquake Sequence. For example, there was significant damage to infrastructure, a high volume of claims and a real sense of isolation for many in the community.

EQC received almost 40,000 residential building, land and contents claims for this event.

We had an opportunity in front of us to work closely with the private insurance industry and pilot an approach that would enable most customers with natural disaster claims to be managed directly by their private insurer end-to-end.

This collaborative approach was designed to put the customer at the centre of the experience, seeking to streamline the claim process for them as much as possible.

There's no doubt that Kaikōura was a big job. We needed to work closely with our insurer partners to support an effective approach and ensure our customers received the best possible outcomes. The forging of the partnership and the camaraderie across the industry helped us work through the challenges we faced together. As an output it was positive to see 75% of customers satisfied with the claims process, and that in the first year alone 80% of claims were settled and closed, with less than 5% reopened.

Working alongside the insurance companies in Kaikōura provided a greater understanding and appreciation of how each other worked, and as a side effect created a stronger sense of connection.

Five years on, all this has helped us shape and improve the processes in which claims are settled today.

The 2020 Public Inquiry into EQC identified areas that had to change and part of this was around developing one point of contact for our customers.

Our response in Kaikōura helped us reimagine our business and implement a new Natural Disaster Response Model, which was launched this year.

The model sees private insurers manage EQCover claims on our behalf. As a result, it enables a unified, joined-up insurance response and recovery system.

 The model itself provides:

  • A single point of contact for the customer and a streamlined service that will enable impacted New Zealanders to focus their energy on getting back on their feet at a time where they need it the most;

  • A way of working that generates greater efficiencies in the overall insurance response and recovery, which will mean clarity sooner for customers;

  • Better data sharing and loss modelling capability, enabling the sector to be more resilient to, and prepared for, different natural disaster scenarios.

We’re proud to have put New Zealanders at the heart of this new model and will continue to work hard as an industry to make the claims process as effortless as possible.

It’s positive to know the approach we took in Kaikōura – one that simplifies the experience for our customers – is now our new normal.

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