7 Jun 2018

Damning report reveals minefield of EQC shortfalls

8:03 am on 7 June 2018

The minister in charge of the Earthquake Commission (EQC) has called for immediate changes to the organisation in response to a damning report.

Megan Woods at the habour reopening in Kaikoura. 14 November 2017.

Minister responsible for Earthquake Commission Megan Woods has called for dramatic changes at the organisation after a report showed systemic problems. Photo: RNZ / Claire Eastham-Farrelly

The report said EQC staff had no confidence in their own data, the organisation needs to treat its customers with respect and honesty, and to dramatically improve the way it communicates with claimants.

The report also makes a number of recommendations which EQC has agreed to address immediately.

These include hiring more staff, establishing a claimant reference group, and making files available to homeowners on request - instead of making them apply for them through the Official Information Act.

Earthquake Commission Minister Megan Woods said the report showed systemic problems and she now expected to see a major culture change.

"The fact that there is a recommendation that there needs to be a change - that people are treated with empathy, that there is transparency, and that people have a clear indication of what will happen with their claim - indicates that that hasn't always been the case," said Ms Woods.

"It is the clear expectation that there has to be a leadership and culture change within the organisation to ensure that people are treated in that way."

Another change is to create a data quality group within EQC to locate the physical files, sort them, check them and capture all the key data.

In May EQC admitted that it had missed 1000 of its open claims, and in fact the figure was around 3600 cases still to work through.

The report was put together by Independent Ministerial advisor Christine Stevenson, who said she had considerable concern about the lack of confidence in the EQC data, including from its own staff.

She said this included their inability to provide her with reliable data.

"I was disappointed, because I was keen to have a good segmentation of claims. I think if EQC could segment its claims and know what claims it has it will be better able to deal with them. Since I completed my report ... roughly another thousand claims have come to EQC's attention, very disappointing, and I think it points to the data issues I have called out," Ms Stevenson said.

Ms Woods said there were also other recommendations or issues which would need more work and analysis before she could make a decision on them.

These include a suggestion to separate all outstanding Canterbury insurance claims, including against both EQC and private insurers, to be dealt with by a new body, and a suggestion for EQC to have a new power to settle what are described as on-sold claims - homes which were purchased under the impression all repairs had been identified and completed.

Another suggestion from the report is to allow EQC to pay out over-cap claimants, even if EQC and the private insurer are still in dispute about the total repair or rebuild cost, and for EQC to then deal with getting money owed from the insurer, as long as it was a small amount.

Ms Woods said working out what a small amount meant was one of the details which needed more work.

People who spoke to Ms Stevenson had suggested a solution would be to simply pay out all the remaining claimants, and she said while that was initially attractive it would pose difficulties.

"It may be an expedient thing to do. It may be an economically wise thing to do, but it's not fair on the claimants who have been settled and you really risk opening a whole lot of claims that have been settled, who have accepted what was offered to them but who see if something more generous is being offered they (might want to) come back."

Some homeowners who are still battling EQC said the recommendations in the report wouldn't fix the bigger problems in the organisation.

Christchurch house owner Georgina Hannafin bought her Linwood home in 2013 under the assumption all earthquake repairs had been made.

But the house was de-stabilised with cracks and visible damage only patched up.

She said the report and its recommendations were not likely to fix the bigger problems at EQC.

"The root of the problem at EQC is that they seem to have a strategy of deny, delay, defer. Communication is absolutely lacklustre. You can send an email requesting information or even requesting confirmation of something you have discussed on the phone and you won't hear back at all. Constantly chasing them for responses or replies. There's no integrity," Ms Hannafin said.

Insurance advocate Ali Jones, whose home was another of the on-sold properties, said the report was progress.

She said in order to solve all of the problems at EQC, the organisation needs to be taken apart and then put back together.

"I think what we are trying to do, and what this report makes clear, is to save a lame duck. The entire system needs deconstructing and reconstructing. Whether you do that bit by bit, or you don't do that because it would be a disaster, but it is clear there are systemic flaws in the process and procedures that need to change," Ms Jones said.

Ms Woods said some of the issues which require a policy change will go to a cabinet for a decision by the end of July.

She also expected some of the issues raised to be looked into further as part of the inquiry into the EQC Act which is currently underway.

EQC chief executive Sid Miller was unavailable for comment today.

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