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

Agony Returns – guest post by Edward


As we approach the fifth anniversary of the Canterbury Earthquake Sequence, Mr Adrian Cowie’s analysis of the situation with City housing stock, as published on Stuff makes for chilling reading and at this point it behoves us to examine the actual state of progress in the City and the outlook.

Reviewing Mr Cowie’s comments, Stuff remarked:

Registered surveyor Adrian Cowie, who has been assessing homes since the September 2010 quake, said the recent Government investigation into unconsented repairs only revealed a small fraction of inadequate work.

MBIE had looked at minimum building standards for its investigation rather than check repairs against the EQC Act and private insurers’ policies, which were of a much higher standard.

“If they’d used insurers’ standards they would have found 100 per cent failure,” he said.

Christchurch City is not just the much vaunted (but elusive) CBD rebuild.  It is principally the suburbs and the houses belonging to the 400,000 or so residents, without whom, there would be no city and Mr Cowie’s expose’ serves to give voice to a suspicion which has been growing for several years that the ‘repairs’ carried out by both EQC and corporate insurers are failing on a seismic scale.  It is clear that the problem of failing repairs and inadequate repair standards is shaping up to be massive and the elephant in this room is obviously the MBIE ‘guidelines’, alluded to by Mr Cowie. Now some five years later, we need to ask ‘why did it happen’, ‘who were the major players’ and ‘how are we going to fix it’?


There are two main reasons that produced the current additional misery for Christchurch homeowners.

  1. As a deeply indebted little nation borrowing monthly on international markets, New Zealand really did not need a major urban earthquake. Having had its reserves plundered for ‘other purposes’, EQC was not fiscally as strong as it should have been in 2010 and Government, faced with many thousands of claims, sought to minimise the costs facing EQC.  Schedule 9 (1)(a) of the EQC Act 1993 makes reference to the fact that EQC is only required to reinstate houses “in a reasonably sufficient manner…”  and seeing this as an opportunity, despite the fact that NZ has a well-functioning Building Act and Code, the Government decided to define ‘reasonably sufficient’ for EQC by commissioning the Ministry of Building, Innovation and Employment (MBIE) to produce ‘guidelines’.  These guidelines set standards for repair which were clearly lower than those of the Building Act 1991 and were designed to avoid the cost of honestly replacing every cracked foundation slab and to generally cheapen ‘repairs’. (Otherwise why haveguidelines’?).

This was not a clever decision and led to two mutually conflicting standards coming into effect as it was clear that the ‘guidelines’ could not apply to private insurance contracts.  The preamble to the first iteration of the guidelines even alluded to this fact.  Apart from the poor and inadequate repairs that ensued – the extent of which is just coming to light – the scheme resulted in many properties which should have been assessed as ‘over cap’ remaining out of the ambit of the private insurers and victim to sub-standard repair.

  1. The second reason for the current escalating situation is that by seeking to dodge its EQC liabilities, National set a fine example for the corporate buccaneers and opportunists who run our almost-unregulated insurance industry. Not surprisingly, they took the gamble that they could also ‘get away’ with use of the ‘guidelines’ to scope repairs to a lower cost and not the ‘policy standard’.  They did it knowingly and instructed their loss-adjusters and engineers and in some cases, even their lawyers, to enforce the MBIE guidelines as the standard to use.

All this was too hard for the local authorities to contemplate, so they simply looked the other way.  (That’s called ‘unconsented repairs’).  The Labour party seems to have been too busy imploding at the time to take any notice of what was happening in our second largest city and for five years has been a disinterested onlooker.

Now that the failures and the legal challenges are mounting, and the deficiencies and shortcomings are obvious to all, insurers, (well, IAG at least) have begun to admit that the MBIE guidelines are not the policy standard.  Clearly this will lead to a considerable come-back on previously settled claims when homeowners realise the extent to which they have been the victims of fraud. Many glued-together slabs will become total rebuilds at enormous additional cost to the insurers.  It’s coming.

Who were the players?

The architects of the MBIE Guidelines were clearly seated in the Ministry of Building, Innovation and Employment, which places the Lead Minister firmly in the picture.  But who asked him to do it?  How was it decided?  I suspect that without a big OIA Request and a view of Cabinet papers, it will be hard to determine – but we can assume that Gerry Brownlee and John Key might have been complicit.  The Minister for Housing (2010) must be in there as well somewhere? It’s likely that they all knew what they were doing and the results are a far cry from their advertised promo below.

Each of us can bear witness to the dodgy engineers and professionals, who supported and were allowed to flourish in this climate of profit-taking and deception, but my view is that as Minister responsible for Earthquake Recovery, Brownlee must take the primary responsibility for accepting adoption of a standard that has cost and will cost the city, years of remediation of sub-standard repairs and outright loss for many people. I see his position as that of a veritable traitor in his own city who preferred cost-saving over preserving or restoring the asset value of his constituents and fellow citizens.  His cheap attempt to pin the MBIE debacle on tradespeople and contractors who did not design the repairs and did only what Fletcher instructed them to do, (and on which Fletchers ‘signed off’), gives a fair measure of the man.

                                        Brownlee needs to resign.     Now.

We have watched his unpleasant, dictatorial style for five years and enough is enough.  This Minister has totally lost any credibility.

As for the others, the disaster we are witnessing has been led from the top. John Key’s Government had the choice to rebuild our second city properly and fairly and to insist on high standards from the outset.  Instead, National, myopic on its focus on the CBD, chose sleight of hand and apparent cost-savings for the taxpayers’ property.  I say ‘apparent’ because it is now clear that there will be no cost savings as it is obvious that repairs to MBIE guidelines are not ‘reasonably sufficient’ and both EQC and the corporate insurers will face huge additional costs now that the failure of the MBIE policy is clear.  I don’t care about the corporate insurers – they will reap the rewards of their own deception, and hopefully the Courts will assist, but the New Zealand Taxpayer has had enough of government dishonesty via EQC and Southern Response.  Now we will have to pay a second time to fix what could have been sorted from the outset.

How do we fix it?

There are many contractual relationships involved in the current unfolding situation(s).  Some were designed from the outset to avoid liability and rats are already attempting to leave sinking ships.             

Whether or not they will succeed remains to be seen.  One thing is certain – unless the people have the sense to combine their efforts to confront Government accountability and corporate greed, EQC and the insurers will pick-off the ‘little people’ one by one, using pseudo-legal claptrap and misrepresentation.  But fear-not, there are many more contractual remedies available than you may be aware of – even if you have signed one of their ‘project management agreements’.  It certainly does not stop there and it is likely that a legal saviour will emerge if the people have the sense to support that avenue.

Now that this huge shortcoming has come to light, it remains to be seen whether or not the National Government will accept responsibility and try to equitably sort out the growing mess.  Even more interesting will be whether or not those on the Labour, Greens and NZ First parliamentary benches will enforce an equitable remedy for the many defrauded homeowners.

That a Government agency could have visited this disaster on the nation’s second largest city, is beyond comprehension.  We need accountability and we need remedy and we need them NOW.


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'.

11 thoughts on “Agony Returns – guest post by Edward

  1. If nothing else, Sarah, the wholly predictable personal and social disaster unfolding in Christchurch is providing you with interesting and appropriate material for your next “Fiasco” book” to rival Naomi Klein’s “Disaster Capitalism”. It is also marking the end of the “old New Zealand” and its competent governing systems driven by public service ideals and the nexus between national and community interests. As I observe the Christchurch mess from a distance, from an equally indebted Nordic nation, I am most interested in how the respective governments deal with problems, large and small, and the extent to which “market forces” and commercial interests are permitted to erode civic standards. Major differences overall appear to be a better informed and intelligent public less easily taken in by corporate and government spin, and greater social cohesion. That aside, New Zealanders have consciously voted for neocon policies since the mid-eighties and, as a consequence, rejected all those values and energies that had previously enabled it to perform socially and, in the end, economically. Whether we like it or not, New Zealand is now ‘runnning on empty’. As a historian, I await the next quarter-century with interest, after which, with my anticipated demise, you will all be on your own. And, by the way, I have more than an academic interest in Christchurch and its fiasco / disaster. I own property insured with IAG / State and can assert that my recent (since 2010) experience of insurers and government and civic agencies of New Zealand parallels your own recorded experiences precisely. You are doing an extraordinary public service in your endeavours. Good luck.


    • Thank you for your thoughtful response – great to see international presence on the blog – my stats show there is plenty of interest globally on this topic. I am in the process of updating the Christchurch Fiasco and simply waiting for the outcome of my legal action before finally releasing it. Thanks for following. Unfortunately as far as the government is concerned this is still only one little city and most of New Zealand is still looking the other way – though having said that I was thrilled with the TPP protests across the country yesterday – not everyone’s asleep.


    • Hello James
      Your comments are pertinent – Reduction of prosperity has certainly left many people unable to respond to the insurance frauds committed against them. Ultimately, it will lead to their strength as they come to realise that they can only win by collective action, but we’re not quite there yet. Pain can lead to wisdom. Democracy must be jealously guarded or you finish up with a government such as this one.
      Go well


  2. This post and the last hit the pile on the head for us. Our floor levels are out by 176mm. This is way over even the MBIE minimum for a rebuild of 100mm. However, guess what? Our insurer thinks jack and pack can fix this to “as when new” (according to our policy entitlements). We are getting help to fight for the rebuild we deserve, but our insurers are making sure it’s like pushing s**t up a hill all the way.


  3. It’ not fair to blame National for this, Labour had done the same, just keeping the costs down,, it’s like all the other countries, try to keep the nicely paid job and scew the people, forgetting the have voted you in, it’s the governement hows to blame, not any party!!


  4. Hi Sarah, is there is also room for perceived corporate NEGLIENCE …

    In allowing people (what has been actually ignored in this process.) the health and safety aspect of individuals , while EQC and insurers tried to find ways to minimise loss..and . At their expense of leaving homeowners in unsafe structures…risking their lives , thru not acknowledging , homes with voids under concrete foundations, walls that lean out so far… That they do not meet building code… When verticality is checked… As I write this I am sure other issues of this nature will also arise…


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