The Villa at the Edge of the Empire

by Farrell, Fiona

  And most pressingly, at this moment in my country’s history, I am a citizen, like thousands of others in this city, of the empires of insurance. I am a citizen of State, and along with my fellow citizens of Tower and AMI and NZI, I am part of the prefectures of IAG and Suncorp within the far-flung empires of MunichRe and the reinsurers.

  Out here on the perimeter, this colony does indeed return a profit. The Australian companies who insure the houses in which we live our lives are reporting massive gains in the aftermath of the quakes. As those Roman businessmen said, anticipating profit in L’Aquila, ‘You don’t get an earthquake every day.’

  In April 2013, the chief executive of IAG told shareholders to expect ‘strong profitability’ in New Zealand, while the other major Australian insurer, Suncorp, told its investors to expect growth of 7 to 9 per cent in the next two years, when GDP would likely struggle to exceed 3 per cent. Between them, the two companies, described by equity analyst Morningstar as a ‘profitable duopoly’, own 65 per cent of this country’s general insurance market. And both, according to a Sunday Star-Times article published in August 2013, recorded share price increases following the quakes: IAG from A$3.75 in late 2010 to around A$5.80, and Suncorp from around A$7 to over A$12. The article quoted a prominent fund manager with investments in insurance companies: ‘the best time to own a general insurer is after a catastrophe.’

  The houses along the riverbank, the houses in the suburbs that stretch across the plains and out to the coast and up the slopes of the Port Hills exist on the edges of the empire of international insurance and reinsurance. Except, of course, Gloor got it wrong. We are not ‘citizens’ in such an empire. A citizen is part of a civis, the collective endeavour of a mass of individuals engaged in mutual betterment. A citizen within that civis possesses both the rights of civilisation and obligations within that collective. The citizen agrees to its laws and in return is protected by them. The citizen has the right to vote, to debate, to disagree. The citizen is one small part of the greatest of human artefacts, a city, whereas the citizens of Nestlé, Subaru and State remain mere consumers. They are figures not on a census but on a yearly return. My only role in these sterile empires is to choose whether or not to buy. There are fleeting collegialities of shared brand recognition: my daughter as a teenager insisted upon the shibboleths of her peers, Levi 501s and Bata Bullets, just as I recognise the same Le Creuset casserole on the kitchen shelves of friends in New Zealand and Canada and France. It’s amusing, but it’s not the basis for true citizenship.

  SO, HOW HAS IT BEEN to live out there in the suburbs where, as Mr Brownlee said immediately following the quakes, with all the grandeur of some Roman general dispensing with responsibility for some troublesome frontier, ‘It’s all over to the insurers’?

  How has it been to live in one of the 100,000 houses damaged by the quakes? To live in one of the 25,000 houses so badly damaged that they exceed EQC’s $100,000 cap? To deal with private insurance companies, whether they are the local branches of international companies like State and NZI and their Australian owners, IAG, or Southern Response, the insurance company that is 100 per cent owned by the New Zealand government, its six board members appointed by the Crown as sole shareholder?

  Southern Response was born out of dire necessity following the quakes when a New Zealand-based company, AMI, threatened to collapse under the pressure of claims, and default on payouts. The company had a strong local presence, having begun life in this city in 1926 as the South Island Motor Union. It had grown to become the largest New Zealand-owned fire and domestic insurer, with half a million customers, many of them local people. In 2008, it had purchased naming rights to the city’s rugby stadium. After decades as Lancaster Park, and a brief spell in the 90s as Jade Stadium for an international software corporation, the stadium became known as AMI Stadium, or more correctly, since the turf was not technically part of the purchase, ‘The AMI Stadium at Lancaster Park’, which may have been accurate but was a bit of a mouthful. Everyone just said, ‘AMI Stadium’. It was the concrete colosseum with its towers and floodlights down behind the car yards on the edge of the central city.

  That stadium suffered damage in the quakes, as did the homes of thousands of AMI’s customers. Six thousand, six hundred and seventy of them were over the EQC cap and so dependent on the insurer for repair or rebuild. Throughout 2011, AMI’s managers made reassuring noises. In September 2011, its director said that AMI had ‘more than sufficient funds to pay all earthquake and non-earthquake claims … it is a robust and successful company’.

  By early 2012, that certainty had evaporated. AMI, it seemed, was running close to empty. Thousands of people could be left with damaged homes and meaningless insurance policies. So the government stepped in. It sold AMI’s ‘good book’, those half million customers, to IAG, meaning that company now owned around 57 per cent of the New Zealand market. The government, however, retained the arm of AMI that was handling quake-related claims: the 11,000 claims from 6670 properties that exceeded EQC’s $100,000 cap, the 3000 claims for temporary accommodation while repairs or rebuilding were carried out, and the 1500 other claims relating to items such as cars that had been damaged in the quakes. This new government-owned entity, Southern Response, has been handling around $1.5 billion worth of claims.

  The manner in which Southern Response and the other insurance companies have been doing business in post-quake Christchurch has been immaculately recorded by a Christchurch writer, Sarah Miles, an investment banking lawyer with experience in the insurance sector. The Christchurch Fiasco: The Insurance Aftershock and its Implications for New Zealand and Beyond steadily and with enormous skill assembles the evidence of insurance manipulation and governmental failure to control the workings of the industry.

  What is repeatedly happening in Christchurch

  is many insurers denying and reducing policy-

  holders’ claims, routinely refusing to pay

  market prices for homes and replacement

  of contents, use of ‘low-pitched’ computer

  programmes to cut payouts, changes of policy

  coverage with no clear explanation, ignoring

  or altering engineering reports, and sometimes

  asking their adjusters to slow down claim

  progress or lie to customers. Then the insurers

  make low offers or refuse to pay at all. They

  stall until claimants are so desperate that they

  are then prepared or forced by circumstances

  to accept what the insurer offers them.

  Such techniques have been employed before to profitable purpose. In America, for example, following the devastation unleashed by Hurricane Katrina in August 2005, property-casualty insurers reported record profits, up 49 per cent from US$49 billion in 2005 to US$73 billion in 2007. Translated to Christchurch, the delaying techniques that help to create such profits — the repeated visits from assessors, the sudden introduction of new ‘surprise’ conditions such as the notion of ‘betterment’, the arguments over whether damage to foundations was caused by this or that quake or shock or pre-dates the quakes altogether — the whole panoply of procrastination — is, writes Miles, an abuse of that ‘utmost good faith’ that underpins all insurance contracts, the agreement by both parties to act with honesty and openness. By way of illustration of that abuse and its deliberate cynicism, Miles mentions a logo that featured on the internal documents of an American insurance company, Allstate: it was an alligator, captioned simply ‘Sit and Wait’.

  IN LATE 2013, THREE YEARS after the initial early morning shake, the Press reports an address by the chief executive of the Canterbury Employers’ Chamber of Commerce, Peter Townsend, in which he stated that only 700 of the 25,000 homes in the city that sustained over $100,000 worth of damage have been repaired. A few months later, in early 2014, the Insurance Council of New Zealand issues different figures: in the three and a half years following the quakes, Southern Response, State, Tower and the
rest have between them rebuilt 725 of 4731 houses that required total rebuilding, and repaired 769 of 7079 houses that received damage beyond the EQC $100,000 cap. Figures in this city are frequently contradictory things, slippery and hard to hold, but Townsend insists upon his assessment in his blog:

  There are around 145,000 houses with damage

  under cap (below $100,000). Of these, just

  under 90,000 have damage between $10,000

  and $100,000 and are being repaired under the

  Fletcher/EQC contract (or increasingly cashed

  up). That $3 billion contract is just over half

  complete.

  There are approximately 25,000 houses with

  over $100,000 worth of damage. Of these

  between 1000 and 2000 have been repaired or

  are under repair.

  There are somewhere around 2000 houses that

  have yet to be determined whether they are

  under or over cap.

  There are also just under 8000 homes that

  have been completely destroyed or written off.

  Mr Brownlee is ‘surprised’ by the figures and also refutes a comparison with Queensland where, following the disastrous floods of 2010–11, laggardly insurers came under fire by stroppier Australians and their media. Their outrage triggered an immediate federal review of the industry that called for, among other things, a four-month limit to process claims. Within weeks, the Gillard government was writing changes into the relevant legislation and by January 2012, insurance industry figures showed that 85 per cent of claims had been processed, leaving just 15 per cent, 4078 claims, still ‘open’. For Australians that figure, which sounds quite delightful to New Zealand ears, caused continued indignation and vigorous headlines. ‘Insurance Settlements in Limbo!’ But Mr Brownlee rejects any comparison with the Australian experience: because they are multiple events, quakes are more complex than floods, and besides, settlement would require ‘leverage’ on the insurers. Leverage beyond the scope, it seems, of New Zealand’s government.

  So, how has it felt living here at the edge of the insurance empire in this city, among the crossfire of figures and statistics and claim and counter-claim? How has it felt in this place with its colonial argot of Red Zone and Green Zone, assessors and loss adjustors? Like those Inuit with the forty-one words for snow, the inhabitants of this city have had to learn a new lexicon to describe the environment in which they have found themselves living.

  A house that is not within a Red Zone but has nevertheless been damaged so badly as to be uninhabitable is said to be ‘red stickered’.

  In a calamity that is not a single event, but made up of many thousands of events, claims must each be attributed to a specific episode and the precise cost of that damage calculated: this is called ‘apportionment’. Apportionment takes a very long time. It requires a delicate scalpel.

  The process by which the land around your house is tested for life risk — a falling boulder, perhaps, a sudden slump — is called ‘ground truthing’.

  If the land beneath your home is safe enough for rebuilding, it is ‘TC2’. If doubtful, ‘TC3’.

  If, with your cash payout, you wish to buy a house that has an extra bedroom or some feature not present in your previous quake-damaged home, it is called ‘betterment’. You cannot contemplate betterment. Betterment is not permitted.

  You have to learn this new language if you are to stand a chance of understanding and communicating with the people who have power over what will happen to your home. It is as necessary as if you were the indigenous inhabitant of some small island taken over by alien invaders.

  So how does it feel to be that inhabitant, in spring 2014, four years after the initial jolt?

  FOR SOME, ALL IS WELL. Their home may have suffered little damage; it stands perhaps in a suburb where roads remain intact and there is little evidence of disorder. If the home did have damage, it may have been repaired quickly and expertly by competent contractors. EQC and the private insurers acted fairly, courteously and in a reasonable timeframe. Sometimes the result is a home that is even tidier and stronger than it was before. If the damage to the home was so great that it required demolition, it may have been rebuilt, perhaps elsewhere, and the owners are delighted with the move. Such people sometimes write letters to the paper, thanking their insurers, their builders, the entire, thoroughly professional team. They are delighted with their new home.

  And then there are the others.

  Here is a woman who is living with her husband in her old childhood home in Shirley. Her parents have moved to a retirement home, leaving a house that was damaged but still habitable. She has lived there for more than three years, after they ‘burned through’ their insurer’s accommodation allowance in a single year when their own home on Huntsbury Hill was red stickered in September 2010 and declared uninhabitable.

  Since that day, they have accumulated a file of hundreds of phone calls to their insurers and dealt with nine loss adjustors, the ninth of whom finally produced a scope of works in February 2014. Six months later, they still have no idea when those works might begin, no idea when they might be able to move back into their own home.

  So, how does it feel being back in the house she lived in as a teenager fifty years ago?

  ‘Weird,’ she says. ‘I chose the orange carpet in the bedroom. It’s still there. They made things to last in the 70s. It feels unreal to be here, as if I’ve gone back, as if I’ve never been anywhere.’

  To begin with, she visited her own home on the hill, but no longer. ‘Every time I went back it was worse. At Christmas a plumber had turned the water on so the ceilings had collapsed.’ Going home now makes her feel ‘sick and depressed — just a big bad feeling’. That ‘bad feeling’ expands to a general conviction that a kind of contract has been broken. ‘I’d lived a nice middle-class life. I wasn’t used to being treated rudely or put off when I phoned for information or whatever. I wasn’t prepared for that.’

  She finds herself yelling at the television reports of progress and opportunity within the city. ‘I sit there thinking, “How can you sit there lying like that?”’ She feels also ‘irrational anger’ at things like All Right?, a social marketing campaign funded by the Mental Health Foundation and the Canterbury District Health Board and supported by CERA along with the Ministries of Health and Social Development.

  In early 2013, posters had appeared around the city:

  ‘IT’S ALL RIGHT IF YOU FEEL FRUSTRATED AT TIMES’ on one side, and ‘IT’S ALL RIGHT IF YOU’RE FEELING PRETTY STOKED’ on the other.

  Or ‘IT’S ALL RIGHT IF YOU FEEL A LITTLE BLUE NOW AND THEN’ on one side, and ‘IT’S ALL RIGHT TO FEEL LUCKY’ on the other.

  The campaign had been sparked by a medical survey that discovered that ‘stress and anxiety caused by dealing with insurance repairs and the agencies involved in the recovery has created a double blow that for many was more debilitating than the earthquakes’. Linked to the posters were morale-boosting events. People with large puppet heads gave out free petrol to random commuters. They picked up people waiting for buses in limos to take them wherever they wanted to go.

  ‘There is absolutely nothing,’ she says, ‘about this situation that is “all right”.’

  Early in the morning when she wakes, it is to fret that she may never live in her home again.

  ‘The sensation of being trapped is awful, not being able to move forward.’ She tries to focus on the positive. She knows she is lucky to have a house where she can stay, and she enjoys watching life here in a little cul de sac of twenty-six houses, all now flats apart from her parents’ home, but she feels that her life has changed, and not for the better.

  HERE IS A YOUNG FAMILY. They are seated in their home, and it looks lovely: freshly renovated with big, sunny windows, new kitchen, new carpet, crisp paint on the walls. It could feature in the pages of some lifestyle magazine: a makeover story, except this makeover has not been achieved in the standard ma
gazine fashion but has taken years of negotiation with niggardly insurers, unqualified assessors, poorly skilled tradesmen or, worse, tradesmen’s ‘hands’, uncertificated and inexperienced, and their slipshod, once-over-lightly workmanship. Foundations have been quickly jacked and packed, doors and windows no longer close, leaks and cracks hint at future failings.

  Such families become locked in argument over the detail of repairs — who or what caused damage, who should pay, how much should be paid — a catalogue of detail that is exhausting to enumerate and to debate, and overwhelming in its effect on those involved. There are the endless emails, the time spent on hold as someone plays soothing piano medleys, the meetings, the late-night talk in the kitchen before retiring to bed about what to do next, how to proceed.

  Add to this the difficulties of moving while repairs are being effected, the packing and unpacking, the difficulty of finding an affordable flat in an area that will not mean the children must change schools, the sheer cost of such accommodation in an unregulated market: $1000 a week for a two-bedroom unit, $1200, $1500 …

  Add to this the normal upheavals of life: the partner who becomes ill, the elderly parent who must be found residential care. The things that happen.

  Add to this the new fears consequent on land movement: the fear of bad air, the toxic sludge that has pooled beneath the house and the dust that blows everywhere on a warm nor’west day, carrying its uncertain particles. Or flooding. A nearby creek has silted up. Now it floods not just the lawn as it has done in the past, but laps at the back step. It rises beneath the floorboards, soaks the carpet, seeps into the joists beneath the gib, leaves that pervasive taint of damp and raw sewage in the very framework of the home.