Storm and floods may cost $24m

Press, Volume CXV, Issue 33965, 4 October 1975, Page 2

Storm and floods may cost $24m

(From our Wellington reporter) WELLINGTON, October 3. Total losses from the gale in early August and the flooding in mid-August are expected to be as much as s24m, of which only about sl2m .will be recoverable from insurance companies and the Earthquake and War Damage Commission.

It is unlikely that any finite figure for recoverable losses will ever be known, because the insurance companies are under no obligation to disclose their losses. But the commission has already received 7700 claims from the two disasters — which it has treated together because so much of flooding damage was a result of earlier wind damage — and it expects this figure to be within about 200 claims of the final figure. The commission expects to have paid out about s4m

by the time all the claims have been assessed. It expects this to be half what the insurance companies pay, or one-third of the recoverable loss. Experience from the Wahine storm of 1968 suggests ithat only 50 per cent of the losses from disasters can be recovered, and the commission has found many cases of property underinsured or not insured at all — apart from public property such as forests, which do not carry insurance cover. Even with the arrangements being made to dispose of the wind-blown timber, it will be worth far less than it would have been. Most of the 7700 claims to the commission have been from the eastern South Island, but there have also been about 300 from Wairarapa and about 100 from Waikato and South Auckland as a result of the two disasters. The commission does not replace old with new after a disaster, and its assessors take depreciation into account when making their assessment. It pays cash as soon after the assessment as possible, so that the insurer has a figure to compare with the quote for repairs or replacement. So far it has had only one request for re-as-sessment because the quote exceeded the assessment — and that over over a difference of $lOO in a $l7OO bill. Suggestions have been made that some building

contractors have been profiteerihg, making quotes substantially higher than the assessments of insurance companies; but the commission considers that any disparages have probably arisen because of the wish of the insured to have a rush job done, with consequent higher costs than the original assessment indicated. The policy of the commission’s assessors is to assess the cost or putting the property back into its pre-storm condition, and if repair or replacement involves betterment of the property then this is negotiated with the insured so that the insured can know in advance whether a quote for repair or replacement is inflated or realistic.