Those who attended the talk by Melissa Heath will recall her speaking about the impact of insurance on our lives. It seemed appropriate for me to print a document I have recently received from Melissa to think about before we listen to Tim about the issue of “as-is” houses and the ramification of this for us to think about as a City.
It’s really hard to comprehend just how big this problem is for Christchurch, and that it not only promises to be the next ‘leaky home’ issue – but that it has the all too real capacity to blow people’s confidence of buying pre-existing house stock right out of the water. Worse still, this is not only a Christchurch problem – it is nationwide post disaster, especially now, people are not insuring their homes for enough and insurance companies (burnt by their Christchurch experiences) are no longer offering post disaster repair/rebuild programmes.
Although securing hard data on accurate figures has proved very difficult, here are some figures for you….
- More than 100,000 dwellings made claims for damage. 470,000 claims made to EQC over the four major earthquakes.
- About 32,000 of those dwellings were cash settled – either as over cap and referred to insurers – or settled under cap.
- 4,000 were
cash settled under cap.
- As we know, cap is $115,000 incl GST.
- There were four events that triggered individual caps.
- So, an under-cap settlement could be anything up to $460,000.
- 28,300 were
cash settled over cap
- About 18,000 of those settled as over cap and referred to their insurers, cash settled with their insurers.
- So, about 22,000 homes received cash settlement amounts that have not been recorded anywhere and are currently (I believe, spuriously) protected by the Privacy Act 1993 (though a house is not considered a ‘person’). There is no accountability for the billions that have been paid to homeowners away from the eye of regulators, local or central government.
More than 10% of Christchurch’s pre earthquake housing stock cash settled their damage. We have seen a breath-taking number of homes advertised as ‘as is, where is’, but then there has been no follow up on what happens to these homes next. I have seen many a property for sale that has not had repairs done as settled for and re-marketed as repaired. In fact, it is such as easy flip that multiple people /companies are advertising to buy these houses as is. With no access to settlement documents made to the original home owner, incoming owners have no idea what it was that needed fixing in the first place. I have also seen old EQC documents used in marketing homes, knowing full well that the home had eventually gone over cap and had been settled by the private insurer. None of the more current and pertinent documents make it into the sales documents.
Thankfully, I have ways and means of detecting this behaviour, but the average home buyer has none. However, I am pleased to see that all EQC claim numbers are now available on line to search via Ecan’s website, so home buyers can check what EQC claims have been made against a dwelling. The site as this is very new having been up since August 2019.
Coincidently, the number of brand-new domestic use cars has sky rocketed over the same time as cash settlements. Cash settlement began in 2013 and built up in earnest in the years between 2014 and 2017.
The long-term average of the number of new domestic car sales in NZ is about 75,000pa. There was a big dip in the years after the 2008 GFC but by 2012 was back on track. And then cash settlements began…..
- 2013, 82,500 cars sold – an increase of 7,500 over long term average
- 2014, 90,500 cars sold – an increase of 15,000 over long term averages
- 2015, 95,000 – an increase of 20,000
- 2016, 102,500 – an increase of 27,500
- 2017, 108,500 – an increase of 33,500
Of course, it could be entirely coincidental…. Did NZ GDP growth or income growth explain those huge rises? And just to be clear, these figures exclude commercial vehicles.
There are solutions, of course, but not the will power, to put a stop to this.