When the Shaking Stops: Public Insurance Cover for Damage to Land in New Zealand
Posted: 12 Jul 2019
Date Written: July 4, 2019
The Earthquake Commission Act 1993 governs the provision of public insurance cover for natural disaster damage to residential properties in New Zealand. Between the Canterbury earthquakes in 2010–2011 and August 2017, a number of possible reforms to the Act have been proposed. The most recent proposals are expected to be introduced to the House of Representatives late in 2017. This paper analyses the difficulties with the Act, and considers possible options for its reform. New Zealand is unusual, if not unique, in providing public insurance cover for damage to residential land. As such, the issue of when public insurance cover for land should be available has not been well explored. This paper will thus focus on cover for land damage. This paper argues that, for the provision of cover for land damage under the Act to achieve post disaster recovery in the way it was designed, a number of changes to the current scheme are required. Cover should be refocussed on ameliorating damage affecting the home and access way, and the limits of cover clearly defined. Premiums should be introduced for land cover and separate legislation passed to manage ‘red zone’ scenarios in which homeowners are required to relocate.
Keywords: insurance, natural disasters, Earthquake Commission Act 1993
JEL Classification: K00
Suggested Citation: Suggested Citation