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Thursday, 22 September 2011

Labour's Canterbury Earthquake Recovery Plan - issues of detail regarding insurance problems

Labour's Canterbury Earthquake Recovery Plan, like all policy documents, has the big picture but no detail.

Of particular concern is the absence of timing for each of the proposals. When will a specific policy be initiated? What priority will it be given in the whole raft of post-election policies the incoming government would bring with it?

Some proposals are more time sensitive than others and, despite the good intentions, there is a risk that without proper planning many will not happen in time to be useful. Of these time-critical issues the following two in particular come to mind:
  • Funding test cases against insurance companies
  • Establish an Independent Insurance Commissioner

Funding test cases

Funding test cases against insurance companies is critically time sensitive in Red Zone areas because of the reducing amount of time available to accept the government's offer (closing in May 2012). By then significant insurance related legal questions will need to have been resolved (e.g. the situation of an insurance company opting for a rebuild on Red Zone land). Anyone intent on taking Option 2 (insurance company for the building) will have little time to establish what pitfalls there might be, and only until April 2013 to resolve them with their insurance company.

Even assuming some mechanism could be set up within a few months, the eternity of the due process of law could see all but the most hardy give up. Unless additional judges are made available to handle the cases, and a common sense of urgency agreed (as with the recent case between EQC and insurance companies), there would be little capacity and commitment to getting the issues resolved. As a consequence the May 2012 and April 2013 deadlines (and the threat of using compulsory acquisition) would coerce homeowners into giving up.

Independent Insurance Commissioner

Setting up an independent insurance commissioner will take time, and protracted negotiations can be expected as insurers take whatever steps they can to ensure their interests are protected. Chances are only those who live in the Green Zone, and face a wait of years before their insurance company does anything to help them, will have an opportunity to benefit from this proposal.

Time and feasibility

Clearly time is crucial, and the pressure comes from the deadlines set by current government policy.

The ongoing delays in rezoning Orange areas is making the decision deadline of the end of May 2012 more threatening as each month goes by. With some areas facing a wait until early next year the much vaunted "nine months to decide" (see the CERA Time Guide to your settlement here) is increasingly hollow.

Would a Labour Government suspend or extend the current deadlines for deciding on the government offer, and vacating Red Zone properties? If this was on the agenda then suddenly everything becomes feasible.

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