EQC earthquake liability increased by $4 billion

The Earthquake Commission (EQC) has increased its estimated Canterbury earthquakes liability by around $4 billion to $7.1 billion, Finance Minister Bill English has announced.

Tuesday, August 30th 2011, 12:00AM

by The Landlord

The new estimate follows an actuarial valuation of EQC’s liability, based on available field assessments of damage claims. It includes an increase of $2.17 billion from the February 22 earthquake and $1.42 billion from the June 13 earthquakes and other aftershocks, which were not previously included.

"The Government is committed to rebuilding Christchurch and supporting the people of Canterbury," English said.

"Today's announcement will not affect homeowners’ claims, which EQC will continue to pay in full."

English also said the increase would not delay rebuilding work in Christchurch as most of those costs would be met through the National Disaster fund, which held around $6 billion before the first earthquake.

EQC's initial liability estimates were based on international models for calculating damage from a single event. While these hold for hold for the September 4 earthquake, they were not designed to calculate the effects of multiple events.

"Quite clearly the scale of residential damage from the February 22 earthquake has been worse than initially thought, with more claims, more damage on a house-by-house basis and greater land damage than expected.

"For example, it was initially thought 12,000 houses would have more than $100,000 in damage. As EQC has completed more detailed assessments, this number is now estimated to be about 30,000 houses.

"We need to remember these are still estimates and EQC and the Treasury will continue to periodically revise the expected liability as more claims are completed and more information becomes available."

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