The New Zealand Government will review the Earthquake Commission (EQC) Act to examine how the commission prices its insurance and the cover provided.

The EQC, private insurers and consumers have raised concerns that duplication between the commission and insurers is slowing the recovery process, and that the Christchurch earthquakes stretched the commission’s resources.

The review is expected to consider dropping the EQC’s $NZ20,000 ($15,800) contents cover, introducing pricing to reflect risk and to address whether land damage should be covered and if the $NZ100,000 ($79,200) cap on home building cover should be changed.

Treasury will lead the review of the 1993 act. A review group will appoint representatives from Treasury, the Reserve Bank, the EQC and the Ministry of Business Innovation and Employment, plus an independent policy expert.

An insurance reference group will be formed to provide input on the efficiency, effectiveness and feasibility of proposals.

The Insurance Council of New Zealand (ICNZ) will seek representation on the group. CEO Chris Ryan told insuranceNEWS.com.au the Government wants the industry closely involved with the review.

ICNZ has not yet adopted positions on the terms of reference. These include which layers of loss should be covered, how multiple events should be treated, what property should be covered and whether the EQC levy should be risk-based, such as on construction type.

Treasury will issue a discussion document next March and the Government plans to introduce any legislative changes later in the year.

Earthquake Recovery Minister Gerry Brownlee and Finance Minister Bill English announced the review last week. Mr Brownlee says it aims to support “the contribution of a well-functioning insurance industry to economic growth opportunities in New Zealand”, while minimising risk to the Crown from private property damage in natural disasters.

It will examine approaches to the overall management of natural disaster risk and recovery and seek to minimise “socially unacceptable distress and loss” for property owners.

The EQC has received more than 414,000 building claims and more than 93,000 land claims from the Canterbury earthquakes.

It has paid out more than $NZ3.3 billion ($2.6 billion) from what is expected to be a final claims expense of $NZ12.1 billion ($9.6 billion).