H.2 Report of the Public Inquiry into the Earthquake Commission March 2020 Produced in March 2020 by the Public Inquiry into the Earthquake Commission. The content of this report is not subject to copyright, but if you wish to reproduce it in whole or part, please acknowledge it as sourced from the Public Inquiry into the Earthquake Commission. This Inquiry has been conducted according to the Inquiries Act 2013. ISBNs: 978-0-947520-24-3 (Print version) 978-0-947520-25-0 (Online version) URL: eqcinquiry.govt.nz 1 Tēnā koutou, Thank you for your interest in this report, which is the culmination of more than a year’s work inquiring into the Earthquake Commission (EQC) and is aimed at making a positive difference for all New Zealanders. This document sets out my findings and recommendations from the Public Inquiry into the Earthquake Commission. Following receipt by the Governor-General, it provides the Government with the basis for its consideration of next steps. I have tried to present the recommendations and rationale behind them in a clear, readable and concise manner without prescribing how any of these recommendations might best be implemented. In 2018, after I accepted the responsibility to conduct this Inquiry from the Hon Dr Megan Woods, then-Minister Responsible for the Earthquake Commission, I quickly became aware of the importance of the issues that are so fundamental to the everyday lives of New Zealanders. We all face the ever-present threat of natural disasters and we all want to know that when a disaster strikes we will have the means to rebuild and recover from it. A highlight of conducting this Inquiry has been the people I have met and spoken with up and down the country. People have generously given their time to detail their own EQC experiences and provide their views in writing or in person through meetings and public forums. In many cases, the people I spoke with were claimants who had their lives turned upside down by earthquakes and the resulting damage to their homes and struggles over insurance claims. I was moved by what people have gone through and, in some cases, what they are still experiencing as they work to get their lives back on track. In addition to EQC claimants, many people with experience in disaster recovery roles have shared important insights with me through the course of the Inquiry. These participants have included iwi leaders, community groups, insurance advocates, judges, lawyers, engineers, tradespeople, insurers, local body and central government politicians, Chairs of the board of EQC, public servants (such as former and current EQC chief executives and staff) and many others. These interactions in meetings and public forums, combined with close to a thousand written submissions and thousands of pages of documents from EQC and others, have provided me a wealth of information from which to formulate my findings and recommendations. I have also had the benefit of advice from members of a knowledgeable and committed Community Reference Group, which gave me invaluable advice on how the Inquiry could best engage with the people particularly affected by the Canterbury earthquakes. I want to thank them all for their contributions. I would also like to acknowledge the secretariat, led by Dallas Welch, which has so ably supported me through the course of the Inquiry and my Counsel Assisting, Jane Meares, for her professional and thoughtful advice. Public Inquiry into the Earthquake Commission Preface | 2 While the Terms of Reference for this Inquiry are focussed on the operational practices of EQC and the outcomes of claims for people, it is impossible to consider these issues in isolation. That being the case, this report touches on a range of related issues and my impressions developed from these, which may be of use to the Government or other interested parties. The scope of this Inquiry does not include apportioning blame, but I have made clear in this report where I found fault with EQC or where I found its response to be below the expected standard. In the course of the Inquiry, I found EQC’s public response to be instructive. The organisation stated that, in preparation for the Inquiry, it was the first time since the Canterbury earthquakes of 2010-2011 it had gathered such a comprehensive set of information on its handling of the events. As EQC’s board Chair Sir Michael Cullen said, it put into perspective how the Canterbury earthquakes had overwhelmed EQC. EQC has made an unreserved apology for its shortcomings in responding to the Canterbury earthquakes and the negative impacts these had on claimants, families and communities. EQC has publicly stated that it is determined to do better in future events and advised that it has made a number of changes. The proof will be in the effective implementation and delivery of these changes, with the true test being the next major natural disaster. I hope this report goes some way to addressing the issues that have weighed heavily on people affected by earthquakes and other natural disasters in recent years and that it leads to further change that reassures and prepares homeowners for the future. Ngā mihi nui, Dame Silvia Cartwright Chair of the Public Inquiry into the Earthquake Commission March 2020 3 Contents PREFACE ................................................................................. 1 FINDINGS .........................................................5 PART 2 EQC’S OPERATIONAL PRACTICES—READINESS AND THE MANAGEMENT OF CLAIMS RECOMMENDATIONS .................23 Chapter 6: Natural disaster planning and response ........................................................................ 95 6.1: Catastrophe Response Programme ............................. 96 6.2: Review of Catastrophe Response Programme .........97 6.3: New challenges for managing claims .......................100 6.4: Approach to handling claims ........................................ 102 PART 1 EQC’S PURPOSE, ROLE AND OPERATIONAL Chapter 7: Data and information management .. 103 CONTEXT 7.1: Technology and systems ................................................. 104 7.2: Fletcher data issues .......................................................... 106 Chapter 1: Background and context ......................... 41 7.3: Understanding risk through data ................................ 106 1.1: Canterbury earthquakes................................................... 43 7.4: Data handling and quality .............................................107 1.2: Other events in Inquiry’s Terms of Reference ............ 45 7.5: Information access and privacy concerns ................ 109 1.3: New Zealand’s insurance system ..................................46 7.6: Improvements in information sharing ..........................111 1.4 Current insurance environment......................................49 Chapter 8: Staff recruitment and training ............. 115 Chapter 2: Future natural disaster risk ..................... 51 8.1: Staffing ....................................................................................116 2.1: New Zealand’s risk profile ................................................ 52 8.2: Training ....................................................................................116 2.2: Earthquakes and tsunamis .............................................. 52 8.3: Recruitment of the wrong skills ...................................... 117 2.3: Flooding and landslips ...................................................... 54 8.4: Contracting professional services .................................. 117 2.4: Volcanoes and hydrothermal activity .......................... 56 2.5: Climate change implications ...........................................57 2.6: Addressing the challenge ................................................. 58 Chapter 9: Assessment .............................................. 119 9.1: Identifying damage .......................................................... 120 Chapter 3: EQC’s purpose and functions ................. 61 9.2: Recruiting and training assessors .................................121 3.1: Purpose .................................................................................... 62 9.3: Changing assessment approach ..................................122 3.2: Core functions ....................................................................... 63 9.4: Types of assessment ..........................................................122 3.3: Additional functions ...........................................................68 9.5: Difference between assessment and scoping .........123 3.4: Future role and functions ................................................. 69 9.6: Assessment process ...........................................................123 3.5: Civil defence emergency management system .......72 9.7: Pre-existing damage ........................................................125 9.8: Accessing expert advice ..................................................126 Chapter 4: EQC’s key relationships ........................... 75 4.1: Importance of building ongoing relationships ..........76 Chapter 10: Reinstatement standards ................... 127 4.2: Private insurers ......................................................................76 10.1: EQC’s legal obligations ....................................................128 4.3: Other central government agencies ............................ 78 10.2: MBIE Guidance ....................................................................129 4.4: Tangata whenua