EQC initially under-scoped the damage to the house, using inexperienced assessors.

1. First, briefly summarise your experiences with EQC, focussing on what happened and the result.

EQC initially under-scoped the damage to the house, using inexperienced assessors. Later, the house was reassessed where foundation damage was identified with an out of level slab. However, EQC took the view that the foundation damage was within MBIE guidelines on levels and no repair would be required. When we hired our own structural engineer, the chief EQC engineer wrote to EQR and instructed them to ignore our engineers report. We joined the EQC Group Action, and once that was settled EQC put our claim over cap. It was wasted time and money on our part as well as incredibly stressful. At the heart of the problem was the MBIE guidelines that EQC and our insurer have used to deny and delay our claim for years. MBIE wrote to insurers and EQC stating that the guidelines were not a substitute for the standard of repair required in policies or the EQC Act (as the EQC Group Action resolved). The mis-use of these guidelines by insurers and EQC has led to incredible heartache, financial ruin for some, and sub-standard repairs. Some staff at EQC may be guilty of propagating these lower standards, but the creation and use of these guidelines was a calculated move on the part of the government to limit claims.

2. Please describe any aspects of your experiences that went well, and why. 

Honestly, there was nothing that went well in dealing with EQC. The settlement from EQC was hardly a victory. We were financially and mentally exhausted by this outcome, one which remains unresolved as our insurer continue to use MBIE guidelines to deny and delay our claim more than 8 years on.

“EQC and our insurer seized upon the hastily prepared DBH guidelines (later updated under MBIE) to limit the scope of our claim.”

3. Please describe any aspects of your experiences that didn't go well, and why.

From the outset, our trust was misplaced in EQC and our insurer. The initial advice from EQC appeared to be it would sort everything out and we were not to worry. Leaflets were put in our letterbox by EQC in effect advising this. This was also the impression given by our private insurer. What they did not make clear at the very start was that we had to prove the damage in the claim. This allowed EQC and the insurer to make  assessments based on what they were interested in, intentionally excluding damage that was far more serious than were were aware of. EQC and our insurer seized upon the hastily prepared DBH guidelines (later updated under MBIE) to limit the scope of our claim.  EQC also intentionally misrepresented the EQC Act, repeatedly using selective clauses out of context and meaning to argue a lower standard of repair and support its use of MBIE guidelines. EQC was eventually forced to admit its was wrong by the EQC Group Action. I draw your attention to the EQC Group Action and ECQ Joint Statement 28 April 2016 (https://www.eqcfix.nz/joint-statement).

With regards specifics of our claim with EQC, it was assigned to EQR as a repair. We believed that EQC was not fulfilling its obligation under the EQC Act, and working to a lower stand of repair than the Act required.  We hired our own structural engineer to assess the foundation damage and submitted that report to EQC. At this point we were now aware that all claimants must prove the damage. The chief structural engineer for EQC wrote to EQR and instructed them to ignore our engineer's report. We only discovered this in an OIA request much later. Meanwhile EQR scoped the repair to exclude the foundation damage. In the end, it appears EQR could not work out how to level the deck, roof and gutters without a level foundation. The claim was placed over cap. The delay in EQC settling our claim was as a result of EQC misrepresenting the EQC Act and using MBIE guidelines to minimise its obligations, denying us our rights under the Act.

In conversations with our insurer, we were told that it would work directly with EQC to move the claim forward quickly. The opposite was in fact the reality. The insurer was more interested in our claim staying under-cap and made no effort to expedite our EQC claim. In documents from our insurer, its managers and advisors discussed how they could keep our claim under the EQC cap. To this day, our insurer is still arguing our claim could be under cap based on MBIE guidelines, in spite of the EQC Group Action, a court ordered Joint Engineer's Report (between our engineer and the insurer's engineer) and MBIE's own advice that its guidelines are not a substitute for the standard of repair in the policy.

4. What changes do you suggest to EQC’s policies, operations, and service, to be more effective?

This submission is a cautionary tale for the future of EQC and insurers working together or insurers working on behalf of EQC. Commercially it makes no sense for an insurer to recommend a claim is placed over-cap. There is no legal obligation or any checks and balances on the private insurer to impartially represent the claimants entitlements. There is no practical recourse  for claimants other than expensive legal action with expensive experts (a cost beyond the ability of most New Zealanders to meet). Mediation is often the cheap way out of a desperate situation for claimants, and not necessarily in their best interests if not adequately represented.

I am not confident that private insurers can act independently for claimants. Insurers and re-insurers have an obligation to their shareholders first. The delays in paying out, even just weeks, amounts to substantial interest-earning profit. It would be naive to think otherwise. EQC on the other hand has a conflict of interest too as the first insurer. It's relationship with re-insurers is complex at the very least. It must meet the obligations of the Act which are not only to pay out on claims, but also act responsibly in using its funds.

One solution could be as follows:

1. EQC collect and manage the fund, administer re-insurance. Set the public policy, which is effectively EQC's version of an insurance policy.

2. A new independent government legal agency is setup to test cases (not just EQC, but could cover any public interest legal issues where the existing law is not clear or no legal precedent exists). This model is based on the current test cases before the High Court. The government or public can apply to test a case. Each party would meet its own costs, with exceptions granted where the public interest is served. For example, in hindsight it would have met all the costs of the EQC Group Action.

3. Disaster Claims Agency, a new independent government agency to manage claims,  following the EQC Act and any precedents handed down. This agency would not make assessments, rather process claims that meet criteria set down in the EQC Act and its public insurance policy. It would however be independent of EQC.

4. Claimants would continue to be responsible for making a claim, including providing evidence of damage. Claims would be made directly to the Disaster Claims Agency. An online claims kit would expedite this process, with online help available to ensure claims conform correctly. The entire claimants file would be available to the claimant at any time online.

5. Assessments of claims would be done by independent contractors (not insurers), similar to the way a registered valuer works. The assessment would be in two stages. First stage is to confirm the claim submitted is correct (may include a site visit). The second stage is to assess the reinstatement solution provided by the claimant. The claimant would be required to provide expert advice, such as an engineers report. The cost of the assessment can be claimed as part of the EQC cap. Assessors would work to a code of practice and be registered with Disaster Claims. Assessor fees would follow a schedule, similar to the way doctors can. As assessors would be called on in a disaster, they could apply for a subsidy or retainer to ensure claimants could access these services urgently.

6. Resolution Service. Claimants can consult and seek resolutions on their claims, with the option of non-binding and binding outcomes. This allows for pragmatic and practical outcomes, within the framework of this claims process (i.e. not a place to test the law). Disaster Claims Agency and Independent Assessors would be required to participate if called on. Resolution services would be free to claimants.

 7. Private insures need a standard claims process similar to the above, if not the same. The variation on policies is often small but different enough to require varying interpretations. This can causes unnecessary confusion and delays for claimants. A shared claims process with the government agency and the private insurer would avoid duplication and speed up processing. A private insurer would get more transparency about a claim coming its way, allowing it to plan ahead. With this shared claims process, base private insurance policies could be aligned more easily. Private policy variations could be limited to add-on options, which are less likely to be in dispute if specific enough.

8. This is the most important one. The public and private insurance industry must be overseen by a strong consumer protection agency, with real teeth to require insurers meet policy obligations in a timely manner (specific time frames) and act in good faith (defining what that actually means); and penalties commiserate with the trust/risk placed in these companies by customers; failure to meet obligations should be met with substantial fines and/or increased treasury deposits.

Finally, what really happened with EQC?

For the individual EQC senior management, board and the EQC Minister at the time, there are issues of accountability. It does not seem to be a comfortable subject for this inquiry. It is rather obvious from the public point of view that the civil service are unwilling to be held publicly accountable for their actions, with a few exceptions. This does a great deal of damage to public confidence in EQC, its board and potentially the result of this inquiry. Accountability to the people impacted directly and the wider New Zealand public is the true test of this inquiry. Without understanding why individuals in those senior roles took specific actions, we cannot correct and prevent these outcome from recurring. Blanket assurances are insufficient and dangerously misleading. The pain and suffering, and the massive financial losses could have been minimised if not for individuals making ill-conceived and ill-advised choices. Let's not be shy about this, these individuals acted against the interest of vulnerable people, going against the EQC Act, and to be clear, circumventing the law. It is also incumbent on those individuals to explain their choices, why they made them. If we do not fully understand how we arrived at this point, how can we avoid history repeating itself?

Final word

I would like to acknowledge the support of private individuals and organisations that have come to the aid and support of many desperate people in Canterbury and Kaikoura. I would particularly single out EQC Fix (www.eqcfix.nz). When EQC and private insurers would not step up, EQC Fix and its members organised public meetings at their own personal cost and time. EQC Fix has been a champion of public justice for more than 8 years. It would be encouraging for the future if such organisations were not needed. In the meantime if would be good for the inquiry to publicly acknowledge the positive contribution of ordinary people who set aside their own problems to help others where EQC failed.