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Progress made and lessons learned

Posted on Nov 12, 2012

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By Gerry Brownlee

I know for residential property owners 2012 has been a year of contrasts, of frustrations, but also of great progress.

For those whose homes have been affected by the quakes and aftershocks, frustrations have centered on two main issues – for some, the wait for land zoning decisions, and for most, the complexity of dealing with insurance.

In 2012 we completed the process of zoning all residential land in greater Christchurch, and where that land was zoned red, the Crown offer to purchase that land and the buildings on it.

The importance of this process cannot be overestimated – it has enabled property owners to move off substandard land and establish new homes on land they can have some confidence in. To our knowledge, no other government in the world has undertaken such a process, nor offered all affected property owners rateable value for their property, to enable them to move on with some confidence.

I do not suggest that this has been easy, or that it has not been very difficult for some, but it is ultimately a positive step for property owners and for the city.

There have also been frustrations with insurance. Approximately 170,000 homeowners in greater Christchurch have made one or more claims to EQC; a total of over 450,000 claims.

Over the year however, significant progress on many of these issues has been made. There is a new level of co-operation between insurers and EQC, with the sharing of drilling data, and the “joint review” process, which compares and works through discrepancies in scope of damage, in repair methodology and the cost of the repair for a property on a case-by-
case basis.

Although complexity remains, increased momentum towards claim settlements by insurers is now apparent. Over $100m is being spent every month on rebuilding and repairing homes.
Significant advances in apportionment are being made that will result in a faster turn-around of claims for homeowners.

We know that the introduction of the technical categories increased frustration for many, particularly for those on TC3 land. It is important to remember that after the February 2010 earthquake there were serious questions about all of the flat land surrounding greater Christchurch. Around 190,000 properties could, potentially, have needed comprehensive geotechnical investigation.

There are around 28,000 TC3 properties, and about half of these do not have major damage to foundations and piles. For these properties work can go ahead without needing geotechnical drilling reports.

Around 12,500 TC3 properties have major foundation and pile damage which requires more investigation of the ground around them. The technical categories have allowed us to identify these homes and concentrate geotechnical resources on them specifically.

TC3 land needs to be looked at more closely to inform what foundations are needed so the property will perform well and be safe in future earthquakes, and insurers and reinsurers will continue to cover Christchurch properties well into the future.

We understand people’s concerns about the length of time things are taking. It is important to remember that this is a long-term solution to ensure that the houses we repair and build here are stronger and more suitable for the land they sit on. In time, because of these hard decisions, the property market, the residential lending market and the insurance market will recover.

Decisions made around zoning and technical categories have been tough calls, but without them the recovery would be much slower and the situation far worse for many more people.
We are also seeing progress in new insurance cover. Insurers are writing new policies on contract works and home cover for new residential builds. New home cover is usually provided on a “sum insured” basis. This means that customers insure for full replacement, up to a specified value. This is likely to become the norm in Christchurch and the rest of New Zealand in the future, bringing us more in line with the rest of the world.

I am confident that progress will continue to be made. So as we deal with some ongoing frustrations, and perhaps some fatigue, we must not let these cloud the fact that we are making good progress, nor preclude us from taking some pride in how far we have come.

Progress in our residential rebuild, with continued progress with the Christchurch Central Recovery Plan (Blueprint), where our collective thinking and planning is coming to fruition, will ensure Christchurch becomes a vibrant, exciting, and safe place to live and work in and bring up our children – the best small city in the world.

Gerry Brownlee has been Minister for Canterbury Earthquake Recovery since 2010 and is the Member of Parliament for Ilam, a seat he’s held since 1996. He is also Leader of the House, managing the Government’s legislative programme, Minister of Transport, and Minister responsible for the Earthquake Commission.

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