Picking Up the Pieces

In February 2011, Christchurch – New Zealand’s second largest city – was rocked to its core by a 6.3 magnitude earthquake that killed 185 people.

The government declared a state of national emergency which stayed in force until 30 April 2011.  The total cost to insurers of rebuilding was originally estimated at NZ$15billion (US$12.38billion in current translation).  At that point it was already predicted to be by far New Zealand’s costliest natural disaster, and the third-costliest earthquake (nominally) worldwide.But by April 2013, the total estimated cost had risen to NZ$40 billion (US$33billion).

The New Zealand Auditor General noted in a recent report:

New Zealanders are fortunate in that the state provides some insurance cover to homeowners against natural disasters. A public entity, the Earthquake Commission (EQC), is responsible for paying the first $100,000 of damage (all figures in this overview exclude GST) to insured homes after each damaging earthquake.

The 2010 and 2011 earthquakes in Canterbury damaged about 180,000 homes. For more than 20,000 homes, the damage will cost more than $100,000 to repair, so it is the responsibility of private insurers. EQC contributes $100,000 to the cost, but the private insurer manages the claim.

EQC is responsible for the remaining 160,000 or so damaged homes. It anticipates paying cash to settle about half of the claims and managing repairs to the rest.

This report is about how EQC has performed in managing the home-repair programme.

The report provides the context of the work that the ECQ undertook:

EQC has had no comparable situations to draw direct experience and lessons from given the scale and complexity of the repair activity is unprecedented in New Zealand.

And this is what makes this report such compelling reading.

What do you do when what is asked of you is of such a magnitude that you have never experienced it before?

What are the key lessons that you can take from others in similar tragic or defining circumstances?

For anyone with even a passing interest in major event contingency planning this report should be required reading.

As the Auditor General notes:

(Public) entities need to sensibly prepare for potentially catastrophic but unlikely events.

Those events can require public entities to administer large and complex initiatives that must be quickly set up. Examples of such events include the failure of significant financial institutions, a large mining disaster, a global pandemic, a shipping disaster, or a food contamination scare.

Being prepared for these types of situation is difficult but possible.

Although detailed action planning cannot be done before an event, entities can prepare a coherent strategic approach, or framework, ahead of such events.

A disciplined approach is required when responding to these events, particularly once the immediate emergency phase of the event has passed.

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