Vero Voice Blog

NATURAL DISASTER RESPONSE MODEL – WHAT DOES IT MEAN FOR NEW ZEALANDERS?

By Campbell Mitchell
Executive General Manager, Claims

3 November 2020

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This week private insurers and the EQC announced their agreement on a new Natural Disaster Response Model which will change how we handle New Zealanders’ home insurance claims in the event of a natural disaster.

The new agreement is the result of years of experimentation and collaboration within the industry, based in particular on learnings from the 2010 and 2011 Canterbury earthquakes, and the model we used to respond to the Kaikoura earthquake. It is intended to provide a better way for us to support our customers.

How will the new model help New Zealanders impacted by a natural disaster?

1. What is a natural disaster?

I’m sure most New Zealanders feel that they know what a natural disaster is, but it’s important for our customers to know that this agreement relates to “natural disasters” as defined by the Earthquake Commission Act. These are:

  • Earthquake
  • Natural landslip
  • Volcanic eruption
  • Hydrothermal activity
  • Tsunami
  • Fires resulting from any of the above causes.
  • Residential land damage (to specific limits) caused by storm or flood damage.

2. What has changed?

In a natural disaster, New Zealanders’ house insurance is provided by two parties: the EQC covers damage to land, and damage to residential property up to $150,000 (plus GST). Any additional damage is covered by private insurers, like Vero, up to the customer’s sum insured. 

In the past, this meant customers had to lodge a claim with the EQC and then - if their damage turned out to be more than the EQC cap – with their insurance company.

This agreement means in the future, customers will only need to lodge one claim with their private insurer. Their insurer will manage the entire claim, including the EQC portion.

Damage to land as a result of a natural disaster is still covered by EQC however, private insurers will manage land damage claims caused by a natural disaster on behalf of EQC. 

3. How will this help New Zealanders? 

This agreement is intended to make it simpler, easier and faster for New Zealanders who are affected by natural disasters to resolve their insurance claims.

They’ll have to lodge claims with only their insurer.  They won’t need to go through duplicate assessments by EQC and their insurer and they won’t need to wait for EQC to assess their claim before they get support from their insurance company.

4. Why does this agreement matter?

Ten years on, insurance companies and EQC continue to work to resolve claims from the Canterbury Earthquakes.

There are many reasons for this – these were complex events that caused significant land damage. A significant factor, though, has been New Zealand’s dual insurance model which has caused additional complexity, delays and double-handling for our customers.

This agreement is the result of years of work from the industry to improve the way we support our customers, and to enable us to deliver better outcomes for them in the moments that really matter. 

The information in this article has been compiled from various sources and is intended to be factual information only. It is not personal advice and any description of an insurance product or service is not a complete description of all the terms and conditions applicable to the particular insurance product or service. You should consult a qualified adviser for advice on whether the information in this article is suitable for your personal situation and needs. While we take reasonable steps to ensure that the information contained in this article is accurate and up-to-date, it is subject to change without notice. Vero Insurance New Zealand and its related companies does/do not accept any responsibility or liability in connection with your use of or reliance on this article.

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