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

Understanding “recovery” after a major disaster – Guest Blog by Herman Meijburg

Leave a comment

SAMSUNG CAMERA PICTURESIt is nearly three and a half years ago since the first earthquake rocked Canterbury, leaving the City of Christchurch and it’s surrounds with a 40 billion dollar recovery bill. In the course of the ongoing quakes people died and thousands were seriously wounded. Many more lost their homes and businesses. The city was in ruins. As for myself, I was also physically affected, but as time has gone on the initial bruises and hemorrhages have disappeared. What has not disappeared though, is our quest for the fair settlement of our broken home. Ever since September 2010 we have lived with generous family, on request we house sit for friends and acquaintances while they are away, longing for a place we can call home again. Together with many others, we feel we have a ‘refugee status’, but in various media we are not called refugees but ‘hostile’ claimants. So far the whole process we have been through is a far cry from ‘recovery’. I want to share with you what I have learned about the much used term ‘recovery’ after a major disaster.

Some months after the big February 2011 earthquake with its many casualties, authorities started to coin the word recovery. After the search and rescue phase and after clearing the streets of rubble, the recovery phase started with the demolition of thousands of buildings and homes which were structurally no longer safe for living or trading. The damage to the City and the land was assessed, as was the damage to essential services and the like. After that moment in time priorities were set as to what needed to be done first. Experts were consulted and their opinions sought. People were stimulated to share their vision of what the City needed most and how it would look in the future on paper. Plans were drafted, decisions made. But after nearly three and a half years, my wife and I are still waiting for our recovery to begin. And we are not alone in this prolonged wait. After three and a half years there are hundreds of businesses and ten thousands of homeowners waiting to get a fair settlement for the losses they sustained.

It suddenly struck me that many people here in Canterbury can only start their recovery from this terrible natural disaster when all things necessary to bring such recovery are finally done and attended to. Many of us here are still in the preparatory phase of recovery. Being in a position where businesses and homeowners can finally say that they can sit back to fully recover from all the effects of this disaster takes time, lots of time and effort. Before we can fully rely on our broken sewerage system to work properly it needs a total rebuild. Before we can drive smoothly from one side of town to the other, we have to repair hundreds of kilometers of roads. For a city council to really be able to look after the interests of its citizens it needs trustworthy leadership, transparent prioritizing, community based planning, accountability. We here in Christchurch have experienced that after this big disaster national and local government was initially in disarray, open to short-term thinking and wavering decision making. It has taken three years and a Council election to clear the woods. It seems that we have finally got rid of the blaming game. But that is not recovery as I understand it; it is the tiresome and painful process of preparing for recovery! In assessing where we are at, the recovery is very sparse and at best partial. I am of the opinion that we are still in the preparatory phases of recovery. What many like to call recovery is actually still the concerted response to the aftermath of the earthquakes. Only when the roads, only when the services we need, are sorted, only when local, regional and national governments get their responsibilities properly aligned, the real recovery for businesses and the people in Canterbury can begin. It is only when things are back to normal that disaster affected people can come to terms with their losses and straighten out their lives.

One can argue that because the earthquakes caught Christchurch and its surrounds by surprise, unpreparedness and disarray stretched the timeline causing considerable delays in this road to recovery. This circumstance has, no doubt, put an extra strain on people and businesses. However there is one industry that could have helped us through this phase more quickly: the insurance industry. By the nature of their mandate they are equipped to cope with risks and adverse events. They are supposedly set up to keep their customers ‘in their stride’ (an advertisement used by State Insurance (IAG)) or, in other words, to put their customers back to a position as similar as where they were before the event so their customers can get on with their lives. This stands to reason – why else would businesses and individuals take out insurance?

In The Press of February 21st, 2014, Marc Greenhill quotes research done by Marsh (The Marsh Risk Management Research Report: Comparing Claims from Catastrophic Earthquakes, February 2014) comparing the time taken by insurers to settle Marsh’s claims. In Japan and Chile 75% of the claims were settled within 300 days of the initial event. In comparison with the time it took in Christchurch, that equates to three times faster than the performance of the insurance industry here. In Christchurch it has taken 1080 days for 75% of the commercial claims to be settled. These figures are shocking in their simplicity. It means that in comparison with Japan and Chile it took on average three times longer for businesses here in Christchurch to get back up and running. No wonder so many businesses have left the City. Some, like the CEO of the Insurance Council here in New Zealand, Mr. Tim Grafton, say that the comparison with Japan is all wrong, because of the unique circumstances here in Canterbury with ongoing earthquakes and the like. However we know for a fact that after the initial major earthquake, aftershocks occur over an extended period of time. Take Japan for example, not only do people have to cope with reoccurring aftershocks, but we were informed last week that yet another leak in the Fukushima Daiichi Plant let some 100,000 liters of radioactive cooling water flow into the environment (CNN, February 20th, 2014). An area as big as the Christchurch, Selwyn and Waimakariri Districts put together leaving the area totally unsuitable for human habitation for hundreds of years to come. This is what I call unique and unprecedented. As for its acclaimed uniqueness, the Christchurch earthquakes can not even dream of standing in the shadow of the still unfolding disaster in Japan. Yet still, in Japan, 75% of the claims have been settled within 300 days. Mr. Grafton should go back to the drawing board with his remark and reconsider why from an international perspective New Zealand insurers perform so appallingly. In the same paper Peter Townsend, CEO of the Canterbury Chamber of Commerce, confirms that
delays in the insurance settlements have been a major problem for local companies….seventy per cent of the commercial claims have been settled and about 45 per cent of the residential claims. That is three and a half years down the track and it’s taken far too long. We need to make sure that we tidy up the tail quickly because the recovery is driven by insurance” (Insurers “slower to react” in New Zealand, The Press, February 21st, 2014).
So far we have talked mainly about figures concerning commercial businesses in Canterbury. But looking at the available residential figures the extended timeframe for settlement is far worse. In Peter Townsend’s words only 45% of the residential claims have settled over the same period. The Insurance Council says that 54% of the 86,887 claims have been settled, leaving 46% or 46,918 claims not yet settled or finalized in some form or other (Aim to fix homes this year, Mark Greenhill, The Press, February 21st, 2014).

For me statistics always reflect and equate to the numbers of people affected. Therefore in people terms we are still talking about some 126,678 thousand affected people (statistically on average 2.7 people live in a home) still in the pipeline, waiting to be put back in their stride by their insurer. If we take the 18 months (547 days) unavoidable delay in the startup of the settlement process into account (as the CEO of the Insurance Council mentioned, as a result “of the unique circumstances in Christchurch in comparison with Japan and Chile”), those still waiting for a settlement are 1080 days minus 547 days (18 months), which is still 533 days behind the international statistical analysis, insurance companies appear to have set for themselves. I consider settlement of a claim a requirement to recovery.

Delaying settlement is delaying the time people can start recovering from their predicament. World wide insurance companies are aware of this and they act quickly in the interests of their customers. Any further delay makes the insurance industry in New Zealand in the eyes of the insurers worldwide look like a group of amateurs who appear not to be able to get their act together, raising the question whether or not they are up to the job. Another conclusion is that these delays in New Zealand are deliberate, serving an agenda their customers have no access to, except that we now know that their profits have gone up astronomically over the past three and a half years (Insurance giant’s profit soars, Richard Meadows, The Press, February 22nd, 2014). It may give you a hint in which direction to think. At this stage my conclusion is that the insurers have turned the road to recovery for many businesses and homeowners here in Christchurch into a nightmare, an unexpected disaster of different kind.

In short, the use of the word ‘recovery’ does not necessarily mean much to those affected by the earthquakes. Some individuals, authorities with the government or with organizations like CERA, the media, policymakers, or those representing the insurance industry, have a different idea what recovery means and to what circumstances the word applies. Our understanding of recovery is blurred by what others tell us to believe about recovery and what many of us experience of it on a daily basis.

Herman Meijburg, West Melton, February 22nd, 2014

Author: Sarah-Alice Miles

Love to write, create and watch the clouds move across the sky - these days in the Netherlands. 'Art allows us to find ourselves and lose ourselves at the same time'.

Leave a Comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s