Download New Zealand Earthquakes

Jones Fee
Legal & Insurance Issues arising out
of the NZ Earthquakes in an Age of
Climate Change
By Craig Langstone
Partner
Climate change & earthquakes
• NZ definition of “climate change”:
“a change of climate that is attributed directly or indirectly to human activity
that alters the composition of the global atmosphere and that is in addition to
natural climate variability observed over comparable time periods”
• Are climate change and earthquakes connected?
• 2 questions:
-
Do earthquakes influence climate change?
-
Does climate change influence earthquakes?
Earthquakes influencing climate
change?
• Movements of continental plates affecting climate well
established
• Plate movements create new mountains/sea trenches –
climate altered as a result
• Large mountain ranges like Andes/Tibet affect climate
• Tambora volcanic eruption 1815 – “year without a summer”
• Relatively non-controversial
Climate change influencing
earthquakes?
• Controversial!
• Changing ice caps/sea-level redistributes weight over fault
lines
• Shifting weight of water on undersea volcanoes
• Australian-led team found strengthening Indian monsoons
increased Indian plate movement 20% over 10 million years
• Koyna dam in India:
- reservoir filled in 1963 and small quakes resulted
- 6.3 quake in 1967
- result of increased weight on earth’s crust
• NZ earthquakes unlikely to be caused by climate change
Government Response to Unprecedented EQ
Damage
• Government, via CERA, will buy Red Zone homes at
current valuation (CV)
• Minor damage to home but CERA paid CV
• Public statements re: insurance payments
• Forthcoming claims by CERA against insurers
• Who holds the power – the NZ Government or insurers?
Council Required Upgrades
• Most NZ insurance policies cover costs of compliance with
regulations
• 2010 Christchurch policy requires 67% seismic strengthening
for new building (after 1st earthquake)
• Council can require work if building dangerous in “moderate
earthquake”
• “Moderate earthquake” – based on 34% likelihood of collapse
• Insurer’s policy obligations v. future well-being of Christchurch
residents
• Future insurability?
Land/Foundation Issues
•
The “value” of the land is covered by EQC – what does this
mean?
•
Practical issues:
Land sunk below flood level
Foundations required to 50 metres
•
EQC land settlement case studies
•
Again, insurability going forward?
•
Government response v. insurers’ appetite for risk
•
Sums insured not based on large scale events like earthquakes
The CBD Plan
• Changed landscape for insurers
• CERA intends to acquire land without paying owner what
insurer should pay
• But –
• Compensation calculated when land compulsorily acquired
• Excludes part of a loss that was insured or “that ought
reasonably to have been insured”
• Based on “willing buyer, willing seller”
In Conclusion
• Christchurch earthquakes probably unrelated to climate
change
• But do Christchurch earthquake issues foreshadow large
scale Government/insurer responses to climate change
issues?
• No longer will insurers only respond to a single event but
instead, to large scale events