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EQC cut contents cover, hikes levy
JOHN HARTEVELT Last updated 13:15 02/02/2012
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The Earthquake Commission has proposed a series of sweeping changes to its business, including dropping contents cover and continually hiking its levy, as it awaits a review.
EQC's briefing to its incoming minister, released this morning, makes a series of recommendations for consideration in a forthcoming review prompted by the Canterbury earthquakes.
They are:
- Removing contents insurance cover
- Introducing variable premiums, depending on house size or hazards risk
- Automatic adjustment of premiums and pay-out caps
- Increasing the excess on claims
The EQC levy was increased three-fold yesterday, jumping from $69 up to $207 per annum for the typical home owner.
In its briefing to minister Gerry Brownlee, EQC says while private insurers had been consistently lifting premiums, the EQC levy had not moved in 18 years.
''The level of the premium should ensure financial sustainability of the scheme over time, given the Government's risk preferences,'' it said.
''It may also be useful to consider an automatic adjustment mechanism for the premium (and also any caps), to ensure that policy intent is reflected over time.''
Excesses on claims had also not been reviewed since 1993 and were a complex mix. EQC suggested that a review of the excesses could ''improve mitigation incentives''.
The briefing also floats the idea of EQC scrapping its operational work altogether and instead becoming purely a financial re-insurer to stand behind private insurance companies.
But it comes down against the idea, recommending instead that it continues to handle the bulk of residential property claims.
Coverage of home contents by EQC, however, is raised as a possible candidate for the scrapheap.
''EQCs coverage of contents increases complexity for customers and, in light of the Canterbury experience, requires disproportionate EQC resources during the recovery phase,'' the paper said.
''Arguably, private insurance or self-insurance may result in more effective mitigation by homeowners than EQC cover does.''
The briefing also reveals that EQC expects ''a significant shortage'' of skilled workers in the Canterbury rebuild, particularly in trades such as carpentry, painting, bricklaying and plastering.
There was ''a number of training initiatives to up-skill workers'' under way ''however, there is a limit to how far these will go in addressing the skills gaps that are expected given the nature of the repair work''.
Shortfalls of 5175 painters, 2000 carpenters and 735 bricklayers had been identified in a study by the Canterbury Development Corporation.
JOHN HARTEVELT Last updated 13:15 02/02/2012
Share
The Earthquake Commission has proposed a series of sweeping changes to its business, including dropping contents cover and continually hiking its levy, as it awaits a review.
EQC's briefing to its incoming minister, released this morning, makes a series of recommendations for consideration in a forthcoming review prompted by the Canterbury earthquakes.
They are:
- Removing contents insurance cover
- Introducing variable premiums, depending on house size or hazards risk
- Automatic adjustment of premiums and pay-out caps
- Increasing the excess on claims
The EQC levy was increased three-fold yesterday, jumping from $69 up to $207 per annum for the typical home owner.
In its briefing to minister Gerry Brownlee, EQC says while private insurers had been consistently lifting premiums, the EQC levy had not moved in 18 years.
''The level of the premium should ensure financial sustainability of the scheme over time, given the Government's risk preferences,'' it said.
''It may also be useful to consider an automatic adjustment mechanism for the premium (and also any caps), to ensure that policy intent is reflected over time.''
Excesses on claims had also not been reviewed since 1993 and were a complex mix. EQC suggested that a review of the excesses could ''improve mitigation incentives''.
The briefing also floats the idea of EQC scrapping its operational work altogether and instead becoming purely a financial re-insurer to stand behind private insurance companies.
But it comes down against the idea, recommending instead that it continues to handle the bulk of residential property claims.
Coverage of home contents by EQC, however, is raised as a possible candidate for the scrapheap.
''EQCs coverage of contents increases complexity for customers and, in light of the Canterbury experience, requires disproportionate EQC resources during the recovery phase,'' the paper said.
''Arguably, private insurance or self-insurance may result in more effective mitigation by homeowners than EQC cover does.''
The briefing also reveals that EQC expects ''a significant shortage'' of skilled workers in the Canterbury rebuild, particularly in trades such as carpentry, painting, bricklaying and plastering.
There was ''a number of training initiatives to up-skill workers'' under way ''however, there is a limit to how far these will go in addressing the skills gaps that are expected given the nature of the repair work''.
Shortfalls of 5175 painters, 2000 carpenters and 735 bricklayers had been identified in a study by the Canterbury Development Corporation.
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