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IAG joins Suncorp and Tower to settle quake claims with EQC

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IAG has reached an agreement with New Zealand’s Earthquake Commission (EQC) to settle the division of claims costs resulting from the 2010 and 2011 Christchurch earthquakes.

The settlement follows similar accords announced recently by Suncorp and Tower with the state agency.

“We are pleased to have negotiated a settlement with EQC in a constructive and timely manner which has avoided the need for costly and protracted court proceedings,” IAG New Zealand CEO Craig Olsen said.

“Both parties can now move forward with certainty, and we look forward to continuing our collaborative efforts with EQC to further strengthen the critical insurance frameworks that underpin New Zealand’s ability to recover from natural disasters.”

Cost allocations became an issue because of a series of earthquakes that struck the region in-between the 2010 and 2011 disasters. The situation resulted in complexities in calculating building and land damage plus the cost of repair between the different earthquake events.

Tower says its settlement with the EQC will see the insurer receive $NZ42.1 million ($40 million) after disbursement to reinsurers and costs. The write-off of the residual amount will result in an impact of approximately $NZ9.5 million ($9 million) on Tower’s FY20 reported net profit.

The insurer says the settlement enables it to turn its “full focus to the future.”

“The Canterbury earthquakes remain a significant event in New Zealand’s history and will have a lasting impact on the community,” Tower Chairman Michael Stiassny said.

“The board determined that reaching this settlement agreement dealt with any remaining unpredictability and gave certainty to our shareholders.”

EQC CEO Sid Miller says the settlement means that both businesses can “draw a line under the past, and continue to focus on helping sort out any remaining claims for customers.”