the insurance fiasco

"Highlighting the inadequacies of the way in which the earthquakes of 2010-2012 were handled by the insurance industry! "


Christchurch Earthquake Recovery

ISBN: 978-0-473-35012-3 (Kindle); ISBN: 978-0-473-35010-9 (Softcover);

This is a book about the management and recovery of catastrophe at a National level.

The aftermath of the Christchurch earthquakes (2010-2012) in New Zealand offered me a rare opportunity to examine the national policies and effectiveness of Government funding and management of catastrophe on a national scale. My findings are both surprising and disturbing. The slow and confused recovery phase led me to examine the insurance industry, locally and globally. This has revealed a clear pattern of corporate greed at the expense of citizens and has shown that the profit-driven model of private insurance can, and very often does, fail those who have paid-up policies based on “good faith” responses that are their due. This is not a book about idealistic sociological concepts, but a revelation of actual Government administrative failure and financial risk-taking, in concert with corporate malfeasance. It is a book every homeowner,  policy-maker, politician, local-government official, Treasury official and economist, should read. This is a story the wider media chooses not to publicize and consequently few people outside Christchurch are aware of the extent of the ongoing insurance battles. These are the same insurance battles fought by citizens the world over after similar catastrophic events. The opportunistic behaviour of the insurance companies together with the lack of transparency and integrity within these corporations, is compounded by the failure of corporate watch-dogs, such as government, the legal system and regulators, all of whom have failed to protect the public interest after the recent events. In the background, behind closed doors, are the strategic alliances and the networked relationships between Government, corporates, professionals and other major stakeholders with the object of profit. The interests and voices of the policyholder and homeowner are conveniently ignored and the lack of redress is well understood by these arguably complicit parties. The book discloses the failures and fallacies of current disaster management strategies, not only in terms of the huge financial implications but also the management of the ‘recovery’ phase. I also examine international experiences of catastrophe from the viewpoint of government policies and funding strategies. I point to a fundamental conflict of interest between corporatism and the need for rapid recovery in the interests of both the affected public, business interests and the economy. Also discussed are the tensions between National and Local government objectives and the unheard voice of the local population. I make comment on the limited efficacy of Civil Law and associated means of redress as protection against systematic corporate breach-of-contract and bad-faith, both in New Zealand and overseas. A need for fundamental change in disaster management is obvious from the findings of this work and I propose a viable, efficient revision of the means to achieve that objective – one which eliminates the current state of financial risk and susceptibility to Corporate subversion.

So what is new in the 2nd edition?

~New is a chapter chronicling the events of 2013 and 2014.

~New is a chapter chronicling the events of 2015.

~New is the demonstration of how the issue of governance and the relationship with stakeholders has become more and more complex and how it has challenged both citizen recovery and democracy itself.

~New is a revision of the issues related to the property assessments by EQC and the private insurance industry.

~New is an account of the rise in the numbers of claims reaching the courts and the introduction of class-actions and some thoughts on why so many of the victimized population failed to take legal action.

~New is the account of the failure of the insurance companies to meet their self-imposed deadlines and how they changed their policies away from repair and rebuild to cash settlement, leaving people underfunded to fix properties themselves.

~New is my conclusion that there is no evidence of change in regulation or legislation to ensure that insurance timeframes are shortened. Still, five years on, thousands have unresolved claims or claims that will have to be reassessed and repairs that will continue on, well into the future.

~New is commentary on the discussion about the risks involved in properly future-proofing the infrastructure of the City, including heritage buildings.

~New is the discovery of the quick fixes which were essentially shoddy repairs. These have now resulted in repairs of the repairs and reassessment of scopes of work having to be done, despite citizens having pointed out the risks early on – yet authorities failed to heed the call.

~New is further comment regarding the use of the Ministry of Buisness, Innovation and Employment Guidelines and the way this has affected the repair and quality of rebuilds as well as settlements for policyholders, in effect paving the way for structural repairs to be assessed as ‘cosmetic’ repairs.

~New are a series of contributions from key members of the public who have contributed their time and energy in putting forward policyholder’s perspectives based on their experiences.

~New is an account of the discussion about the conflicts of interest between professionals working for insurers and the wording of individuals’ insurance contracts.

~New is the ‘sum insured’ debate, the policy change which led to this measure and what it will ultimately mean for homeowners in the event of another major earthquake.

~New is a comprehensive referencing of original materials in order to assist the reader and researcher to go to the original source for further detail.

~New is a revision of my opinions of the way in which certain events and processes have changed over the course of the past five years.

~New is a new conclusion with a summation of the issues that have arisen and those that require further reflection by the nation and which should be conducted as an inclusive conversation.

Review of 1st Edition


In a Civil Society there must be collaboration, openness, ethics, trust and democratically accountable structures at all times but especially after a country has experienced a natural disaster. In Christchurch, post-earthquakes, there has been a systemic failure by both Central and Local Government to meet the demands of the Christchurch, Canterbury and New Zealand communities for tangible solutions and evidence of a comprehensive commitment to this Civil Society. Central Government is mindlessly committed to disaster capitalism, seemingly often without the parameters of ethical and accountable sound policy. A dark cloud has descended over Christchurch called “Westminster politics” with black and white decisions being imposed on a weary population. Central Government has set the rules and all sectors have to keep them. This book clearly highlights these poor decisions and lays them out for all to see. I recommend this book to all as it promotes openness and the need to address issues which both the public and private sectors have to get right, now and in the future. Garry Moore, Mayor of Christchurch 1998-2007

I have never met Sarah Miles, but am looking forward to doing so. Anyone who writes a book like this in the climate engendered by the present government requires courage. My colleagues and I have been calling for transparency and accountability, along with open engagement with affected communities, since the first earthquake. Sarah has started to turn the spotlight on the struggle many Christchurch people have been left to endure alone. When the Prime Minister came here and said he would stand by the people of Christchurch, they expected more than to be abandoned to deal with EQC and multi-national insurers all by themselves. When he said no-one would be worse off, they probably thought there was a bit of political rhetoric in what he said, but they didn’t expect to be out of pocket by six-figure sums. We need to learn from this disaster, so that it is never repeated. But to learn, we need to know the truth. Congratulations Sarah for having the courage to tell the truth and for offering some ideas for the future of catastrophe cover. We need to debate these issues openly and honestly. Thank you for getting the ball rolling. Lianne Dalziel, Current Mayor of Christchurch 2014 (See

As we in Christchurch have suspected, the private insurers’ primary relationship is not with us, the insured, it is with their re-insurers. We need an insurance plan for when New Zealand’s Alpine Fault erupts, the social and economic well-being of communities in New Zealand and beyond is dependent on it. Subjecting the community to this current insurance fiasco is unacceptable. Glenn Livingstone, Christchurch City Councillor

This book is the real and shocking story of the Canterbury Earthquake disaster. The Plot: how our own Government left Cantabrians to be devoured by Corporate Insurance Companies who ran to the fine print in our policies to minimise their contractual obligations. Sarah has the facts and insight into these black years in New Zealand’s history. Kiwis must read this book!! Rev. Mike Coleman (See

It will be for local authorities and national governments to act for the greater good – the honest and full protection of the nation’s citizens. I commend the book to all New Zealanders and Australians. Herman Wijffels, Professor of Sustainability and Social Change at Utrecht University, The Netherlands

~Future Proofing for a sustainable, participatory, democratic society.


27 thoughts on “

  1. I am looking forward to reading your book..Thanks for the information.

    Liked by 1 person

  2. Yes Sarah we are presently “living”this disgusting bullying ar the hands of IAG.
    Firstly 5 years to convince EQC that we were over ‘cap’ unbelievable even after our unreinforced cracked rubble foundation sitting in elevated groundwater over peat and soft silt
    with ejecta identified under house was scoped as full foundation and pile replacement then
    disregarded ! Only to be identified as full replacement again 5 years later by our Geotech engineers and building engineers
    (as well as destroyed chimneys,detached linings,compromised walls,roof and floors).
    Same result …..ignore,disregard and in the process underprice the suggested Jack and Pack and put the policyholder at risk through planned negligence whilst quoting MBIE as their backstop.At the same time a suggested settlement resolution timeframe a dvertised in IAG paraphenalia as 17 weeks is now 40 weeks and lets hit the stressed policy holder
    ( owed a duty of care and honesty ) with a 3 day ultimatum to accept this underhanded,negligently flawed methodology
    to protect the massive profits of a huge insurance corporate.

    Liked by 1 person

  3. It really good job! Thank you.


  4. Hi Sarah. I am interested in the book, in part because there are so many people who still have not been able to settle and move on with their lives. But also because how Christchurch is fixed could be a potential blueprint for how to fix the damage when other communities have their 22 February moment. Quite how Christchurch is supposed to be a useful blueprint when we cannot get our insurance sorted out and the fact that there will probably be councils and large enterprises who have grossly under insured their assets raises very serious questions.

    Liked by 1 person

    • The book will be published very soon. I agree it is important- so that the story is told from the policyholders perspective- hopefully it will start a global debate and help others recover post earthquake not only in future New Zealand events but further afield as well.

      Liked by 1 person

  5. Call me cynical, realistic, whatever but these are the facts the way I see it after 5 years 4 months of fighting to get any form of justice and my legal entitlement.

    Firstly any likely changes to both the law or any guidelines or codes of practice to ensure a smoother disaster recovery next time it happens will only ever be cosmetic in nature as it is not in the interests of business or government to make the process smoother because it will cost them money and everything to this point has been financial mitigation exercise.

    Secondly, it should be remembered that Gerry Brownlee and the like overseeing this process have been guaranteed their positions in parliament so long as they do what the boss says, so you can be sure we will see no assistance there.

    Thirdly, the like of Mr Simpson and his cronies in EQC are also simply doing what the boss says as its in their financial interests to do so.

    Fourthly, you wont see any insurance companies ‘smoothing the road’ to a more equitable and timely claims process as it may interfere in their ability to ‘mitigate’ costs with the standard “deny, delay,defend” process.

    It would seem that the only way to force action is to ’embarass’ them into action as has been proven so often over the past 5 years. Those that went public were very quickly placated and settled behind the scenes because once a persons claims have been settled they no longer make any public noise thereby weakening the position of those remaining.

    We are now at the point where there as many thousand so called ‘complicated’ claims that still remain unsettled, unaddressed and ignored because all the ‘powers that be’ are fully aware that these claims will likely cost them the most so by removing and weakening the ability of these people to fight for justice they lessen the likelyhood of even have to settle these claims at all.

    I put myself in this group and still fight to this day with EQC to get my home repaired/rebuilt. This fight has cost me my home, my famly, my business and my health as well as my wife’s health but I am now in the position where I no longer have anything left to lose, and if enough of us in this position work together we may yet see some justice for all because when you face a group with nothing left to lose you face your worst nightmare. An opponent that will continue to fight with whatever means is available to them regardless of any threat or cost.


    • I wish there were a few more people in Christchurch willing to stand together. People forget that together they are stronger and could achieve much. Getting them to work together though seems a difficult task. If there are others out there like Rob contact me and let’s put something together.

      Liked by 1 person

  6. Well done. I wondered how long it would take before such a book was written. It was too predictable and another example of systemic failure. “Stand by you”, Key. The same rhetoric which accompanied the Pike River tragedy. I look forward to RADIO NZ picking up the story. Good luck to you, and Kia Kaha.


  7. It’s well researched and well written in easy to understand terms. It’s straight up and honest and although it spends a lot of time on the problems facing people it also provides hope for the future and that’s what I loved about it. Well done Sarah.


  8. I am looking forward in reading your book.



  9. We want to hear from other affected home owners who have been ripped off by Southern Response and their exorbitant salvage dollar values deducted from their insurance pay out on settlement, with a view to a group approach to the Commerce Commission under the fair trading act and possibly the Ombudsman,
    Contact if interested.


    • Our stance has changed, we and many others, are now with GCA Lawyers in a class action against Southern Response, our case is being made stronger day by day with Supreme Court and Court of Appeal rulings in the favour of the clients, injustices piled on us and others are going to come back and make SR look like Scrooge, making them pay out more than if they had been decent and empathetic in settlements in the first instance.


  10. Hi, Thank you. No its not a paid theme, I had it modified by a helpful student. Amazing what you can do on wordpress.


  11. Dear Sarah, from the Netherlands our respect…you told us in Holland about all these things in Christchurch and surroundings. In our little country eartquakes are unknown tobus but we suffered under a waterflood long ago, but still generatons remember. Excuse for my englisg but kind greeting from people from the little town Zierikzee in the area Zeeland, Holland


  12. Sarah my view is that the current crisis stems primatily from government failure. There has been much talk of the insurers and certainly they are obstructing and delaying and more. But the NZ domestic (as in houses) insurance industry is built upon EQC a government construct. EQC was created in the forst place because the private insurers would not(and probably could not in a rational business sense) take on natural disaster risk in this country. The government in 1943-44 was not just dealing with natural disasters but the threat of invasion, so the Earthquake and War damages commision was established by act of parliament. This was done by a government with strong keynesian economic policies. The government via EQC took on the role of sole natural disaster risk insurer, leaving fire and general insurance to the private sector who were more than happy to cover this much safer and more reliable risk.
    So by establishing EQC under Keynesian principles the government undetook a large chunk of occasional but potentially massive risk, and more frequent lesser risk. Until 2010 EQC did not cost the NZ government one dollar(ore pound) It collected levies, built up reserves, conducted research and public education and paid out mostly cash settlements for claims of natural disaster.
    But in 1993 a neo liberal nmational government was not as comfortable with the Crown taking and carrying such responsibility and risk. Just as ACC reforms were attempted and many other privatisations were done or attempted, EQC was partially privatised by 1- Buying reinsurance(for the first time) 2- Fixing the building damage cap at $100000, at the time more than sufficient to rebuild nearly all NZ homes except the most elite. Seems incredible today that such property cost inflation has occured where today to build a house for under $100000 would be very rare indeed. So the risk over $100000 was gently, at first transfered onto the insurers and reinsurers. But over time from small begginings the risk share put onto the private insurers grew and grew until doubling in the few short years between 2004-2008..the 2000s property bubble. EQC advised the government of this shift in risk, knowing and having been advised that insurers would not stand for an event if and when such risk was actualised. The government failed to act and the quakes from sept 2010 occured leaving EQC and the government and tthe reinsurers(both for EQC and private insurers) hit with massive claims.
    Most modern insurers in NZ rely primarily upon foreign reinsurers to cover the bulk of risk, in effect bbuying insurance to cover thier risk. The reinsurers when faced with the extent of the claims were both reluctant to continue cover for Canterbury as a whole, if not the entire country, and were concerned that the government had ignored the advice from its own insurer EQC that the building cap(and levies) needed urgent increase.
    Redzoning was done to remove the most prone and most damaged land from reinsurers risk exposure, and to keep them in NZ fullstop.
    CERA advisors have admitted that redzoning was not just about geotechnical factors. It is speculative, but surely the maintenance of reinsurance (ie insurance) was a factor. Ian Simpson has stated on the record that the reinsurers saw the redzoning as “very generous” from their perspective.
    So if redzoning was done in effect as a sacrifice (to the reinsurers) of redzoned homeowners to maintain insurance for the rest of the country, it could be seen as less than a fair deal for these worst hit communities. People could have(still could) stay in their homes though they would be unlikely to get insurance and therefore their properties would suffer considerable market value depreciation.
    Instead by redzoning the government regained the favour of reinsurers and gained 1000 plus acres of land which collectively may in many cases be remediated and sold on as prime waterfront residential land.
    The root cause of the fiasco as you have dubbed it Sarah, I suspect, is the fact that this government failed to update EQCs building cap when advised to in 2008. This caused the collapse of AMI and the other insurers to simply stall settling with TC3 and other claimants while paying out at a rate little more than they are now collecting premiums (which have on average doubled). Removing AMI from the market has removed the sole large mutual insurer and given the remaining isurers effective licence to fleece homeowners for the foreseeable future.


  13. All New Zealanders need to read John Perkins books HoodWinked….Confessions of an Economic Hit Man and The Secret History of the American Empire – Economic Hit Men, Jackals, and the Truth a man that worked on the inside and has exposed the truth about how big business and Govt works and you will see what has happened in the USA is what is happening in Christchurch now.. People need to read more books written by people like John Perkins.. John Pilger and NZ’s own Ian Wishart and the many other Investigative Journo’s out there in order to wake up to what is really happening in this world..Yes most of us are hoodwinked into believing lies and what Govt and big Corporations want us to hear.


    • John, thanks for widening the sphere of relevance. I agree that New Zealanders need to open their eyes to what is taking place in this country. Every day the links with the U.S. become stronger and the observed behaviours become more obvious. Indeed we are walking the same path.
      The emphasis in The Christchurch Fiasco: the Insurance Aftershock relates to the way in which we are NOT protected by big corporates and private enterprise in times of catastrophe and/or disasters- despite corporate claims that in the purchasing of premiums we will be protected and our stuff will be loved. We need to realize that our society is making a big mistake in allowing corporates to protect our fundamental health and welfare needs in times of natural disasters. Natural disasters highlight the absolute necessity of changing the patterns of behaviour and thought in our society. Recovery after natural disasters should not be in the hands of those who benefit from and make huge profits from the misery of those in need. It is clear from the Christchurch experience that our welfare and wellbeing does not figure amongst the corporate or government’s primary concerns- only the dollars count. Only the citizens of New Zealand can insist upon change- otherwise the future looks bleak indeed.


      • Thank you for your well written reply. It is because of people like you that care and are prepared to write the truth that will open all peoples eyes to what is really happening in this world as most of us are blind as I was.
        I am 62 and it really is only the last 15 years that I have discovered the truth and what is happening to us by Govt and big Corporations. People need to realize People is Power and if we all stand together we can force change. I have’nt read your book as yet but I certainly will buy and read it to get your view and what you have found out while writing it.


      • Hi Sarah, Just purchased a copy of your book this morning so I am looking forward to reading it


    • The dvd/film ‘Inside Job’ is also an excellent doco along similar lines…essentially about how most of the western economic, intellectual and financial institutions have been captured by the zero sum game of neo liberal deregulation driven by corporate ideology and undermining functional democracy. We seem to need to relearn the mistakes of the 1920s and go through another 1930s to re establish a rational economic framework and politcal structure that serves People and keeps the powerful 1% in check. There seems to be a paralysis to change the current paradyme…perhaps one good thing that may emerge from the Christchurch Fiasco is some new ideas and answers to this almost global dillema.


  14. I am looking forward to reading your book Sarah… heard nothing but good things about it…
    To date I have had no luck in finding it any of the book shops I frequent though.. none of the book shops in Rangiora or Kaiapoi have it
    We are in one of the red zones in Kaiapoi and will not be leaving, .. the area was described as having area wide land damage, requiring area wide redemiation…yet we were denied access to the land reports to substantiate the claims…and when the reports did come out..85% our red zone would be TC2 if it was green zoned…Roger Sutton called to say it will remain a red zone as he was concerned that we may suffer earthquake damage in the future…. the litany of lies that have surrounded earthquake recovery, the lack of community involvement in the decision making beggars believe…

    Sarah, ts wonderful that you have highlighted the issues in your book…I look forward to getting the book soon

    Brent & Shirley


    • Hi Brent, the book has been selling fast but it is available through all good bookshops- Paper Plus, Whitcoulls, and Scorpio. If you ask for it at the counter they will order for you or failing that through the website. Yes Brent things here are really in a bad way – honest communication between the parties is the key to recovery – as I see it that has yet to begin.


    • Hi Brent
      It was at Rangiora PaperPlus but they sold out. I’ve ordered one.
      Happy New Year to you both.


      • Hi David, ended up purchasing the book from the shop in Merivale…I tried and wanted to support local, but in the end no one seemed to have stock…
        I actually finished the book last night…was really well worth the read…
        Has lots of facts and information, along with solutions….

        Lets hope that this year we/(ie the community) are involved in the decisions that affect us…
        As would be the case if the rebuild was managed from a local perspective…
        and Lets hope the insurance companies are taken to task by the government to speed up the recovery

        As for the on going issue of red zones… and what to do with them… the latest release of withheld portions of cabinet papers, shows that the intention is and has always been to sell the land…the announcement I believe will happen around March/April
        So that will be a windfall for Ngai Tahu… and a windfall for the council as the land will be split into small section sizes, infrastructure will be paid for by the developers, and the council contributions will be used to remediate infrastructure elsewhere.

        Happy New Year


  15. My encounter with insurance following the earthquake raised some questions about agreements reached between EQC and private insurers. It seems that there exists a commercial agreement between those parties that may be outside the policy contract of customers. Meaning that insurers and EQC reached an agreement that may not be legally binding on private insurance customers. The matter of what’s binding between EQC and the public is vague at best, and probably difficult to litigate because the paper trail is so obscure (to be kind). However, private insurers may not have disclosed all EQC terms to their customers (depending on the wording of your policy contract). For instance, it may be that your private insurer is liable for any amount over the EQC payout. That is different to the agreement between insurers and EQC, where they may have agreed to EQC covering the first $100,000. Whereas if your policy does not state that, and only says it will make up the difference, then if EQC pay you $1, your insurer may be obligated to meet the difference regardless of its own commercial agreement with EQC. The point here is that commercial agreements reached in private between EQC and private insurers may not form part of your policy contract unless you agreed.

    Another question that came up was the controversial Department of Housing and Building guidelines, and how they apply to insurance claims. Following the earthquakes, DBH updated their guidelines. While it was probably done with good intentions (unless you are a conspiracy theorist), it was poorly thought through given the implication. Amongst the guidelines is a revised ‘acceptable’ foundation level, revised following the earthquake to double the pervious tolerance. Meaning a house on a lean following the earthquakes could be considered as acceptable based on these new guidelines issued in March 2012, whereas at the time of the event DBH would have advised it was unacceptable. DBH state in their own FAQ on this subject the guidelines are intended for older building with a pre-existing lean, and are not a legal requirement (as the building code might be). Nevertheless, private insurers have been telling their customers that these are DBH “regulations” and they apply to the customer policy contract in retrospect. This is clearly an exercise in bad faith, if not an outright dishonest practice. It may also open up litigation against private insurers who have misled customers into agreeing to settle for less based on the DBH guidelines, or simply denying their claim.

    The problem most claimants have in Christchurch is that, on their own, litigation is probably too expensive and drawn out, particularly if there are many claims before the courts. A joint action is probably more effective if there’s common ground amongst claimants. Given that most of the insurance claims are with two or three large companies, I suspect it would be possible. I for one would love to see one of our countries larger legal firms take up a class action. Given the scale of the events, there’s substantial money at stake and the insurance companies could face heavy costs against them if such an action were successful. The courts tend to favour the claimants, so it seems a pretty good bet. It’s time for the gloves to come off. The government has failed to act in the public interest on this matter, so it’s up to private interests to solve this one. It would also be a major test case and could define the future of insurance and contract law in New Zealand.


  16. Hi Sarah Interested in the book and whether you explore the role of the reinsurers who stand behind the scenes and remain un named and unaccountable, they are not within NZ legal jurisdiction, and yet the entire banking and finance sector is largely beholden to them as is the 75% of NZers net wealth which is held in property ownership?
    Do you explore the fact that the National goven\rnment has since 1993 privatised key aspects of EQC by introducing reliance upon reinsurers, contracting out claims management to Gallagher Basset Ltd and freezing the EQC bulding damage cap at $100000 which shifted the risk of natural disasters onto private insurers?
    Do you explore the sale of AMI to IAG, removing the sole large NZ owned mutual insurer into foreign corporate control?
    Do you explore in the book the effective undermining of redzone property owners freehold land rights and insurance rights?
    Do you look at the blocking/under funding and obstruction of the Parliamentary Ombudsmans Office by this government especially in regard to its role of over sight of EQC?
    Looking forward to answers on these key issues.


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