Summary of AA Insurance’s EQC review submission

A full copy of AA Insurance’s September 2015 submission is available online here. This submission is our response at that time to the Government’s proposed changes to the Earthquake Commission Act 1993 (the EQC Act). We look forward to continuing to work with the Government to ensure the interests of New Zealanders are well looked after in the event of a natural disaster.


AA Insurance supports the continuation of New Zealand’s current dual insurance model. However, the earthquakes in Canterbury have highlighted the need to use our experiences to ensure a more efficient and effective recovery for our customers in future natural disasters. AA Insurance’s experience from Canterbury is that the current scheme introduces unnecessary complexity which needs to be simpler and clearer. To develop the submission, AA Insurance worked closely with our principal shareholder Vero Insurance.

AA Insurance supports the following parts of the Treasury’s Discussion Document: 

  • That EQC continues to insure against earthquake, natural landslip, volcanic eruption, hydrothermal activity, tsunami, and storm and flood. (page 3 of AA Insurance submission)

  • That EQC building cover should continue to only be available to residential building and dwellings in non-residential buildings, where the dwelling constitutes 50% or more of the total area of the building, part or structure. (page 3)

  • That EQC land cover only be available for land associated with residential buildings. (page 4)

  • That EQC should no longer offer residential contents insurance. (page 5)

  • That EQC have a standard claims excess of $2,000 +GST per building claim. (page 11)

  • That monetary caps, premium rates and claims excesses on EQC cover should be reviewed once every five years. (page 12)

  • That EQC cover should continue to automatically attach to fire insurance policies on residential buildings. (page 13)

  • That EQC continues to have the ability, but not the obligation, to directly provide EQC cover to homeowners who request it. (page 14)

  • That all EQC claims be lodged with claimants’ private insurers. Further to this, AA Insurance believes the legislation should require insurers to be the first and ongoing point of contact in the event of a natural disaster and to be responsible for the management of under and over cap claims. (page 14)

  • That the current three-month time limit for claims notification be retained, but EQC be able to accept claims up to two years after an event, unless doing so would prejudice EQC (page 17)

  • That the new EQC Act should contain pricing and transparency principles requiring the scheme to adequately compensate the Crown for its expected costs and risks. (page 17)

  • That the current flexibility to charge flat-rate or differentiated EQC premiums should be retained. (page 18)

AA Insurance disagrees with the following parts of the Treasury’s Discussion Document:

  • That EQC building cover be extended to include siteworks and the main access to the building so that there is one EQC cap available to cover both house and land damage. This proposal could lead to customers being grossly underinsured in the event of natural disaster damage. (page 4)

  • That the monetary cap on EQC cover for combined land and building damage be increased to $200,000 +GST. AA Insurance proposes a building cover of $150,000 +GST but that this be exclusive of landworks. (page 6)

  • That EQC building cover reinstate after each event. AA Insurance submitted that EQC pay the full costs of accumulating damage in each event until it reached the cap, and that EQC cover would then reinstate once the repair was fully completed. (page 7)

  • That land cover be restricted to situations where the insured land is a total loss meaning it is not practicable or cost-effective to rebuild on it. AA Insurance believes such a restriction could result in customers being grossly uninsured in the event of natural disaster damage. (page 8)

  • That EQC’s legislated standard of repair is broadly consistent with current industry norms. AA Insurance proposes EQC cover follow that of the insurance policy on the site. (page 11)

  • That EQC cover should automatically attach to insurance policies on residential buildings, and EQC cover should exclude any natural disaster peril that is excluded from the fire insurance policy it attaches to. AA Insurance submits EQC cover should not exclude any natural disaster peril that is excluded from a private insurance policy. EQC cover should be available to all. (page 13)

Aaron Dickinson

GM Strategy, Insights & Analysis, AA Insurance

About AA Insurance

AA Insurance is an independently operated, New Zealand-based joint venture between the New Zealand Automobile Association (NZAA) and Vero Insurance New Zealand Limited (VINZL). Since 1994 we have demonstrated trusted expertise in home, contents and car insurance in New Zealand, and in 2018 introduced commercial small business insurance. We underwrite our own policies and sell direct to New Zealanders. Our 930+ staff look after over 480,000 customers with 970,000 policies.

We proudly partner with Variety NZ and Eden Park and have been consistently recognised by: Reader’s Digest Most Trusted Brands (since 2011) and Quality Service Awards for Car, and Home and Contents Insurance (since 2015), Kantar Customer Leadership Index (since 2019), Canstar Blue Most Satisfied Customers (2011-2018), and the Colmar Brunton Corporate Reputation Index (since 2015) that recognises New Zealand’s most successful companies. AA Insurance was also named Consumer NZ People’s Choice award winner for car, home and contents (2019 and 2020).

AA Insurance has an AA- (Very Strong) Insurer Financial Strength Rating given by Standard and Poor’s (Australia) Pty Ltd. For further information visit

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