The design of the red-zone buy-out puts CERA first, the insurers seconds, and the earthquake victims last. Homeowners could take the 2007 valuation for their property, ignoring subsequent improvements, or the 2007 valuation for their land plus whatever their insurance company would give for the home. That generated a huge incentive for insurers to understate damage to red-zone houses.
That’s been happening with insurers declaring redzone houses inhabitable. Faced with only getting a partial insurance payout for their house if they choose Option 2, homeowners are really left with only Option 1 – sell the land and house at 2007 valuation to CERA.
Now, as it gets hold of redzone homes, CERA is having them revalued for pursuing insurance claims. It stands to make a profit from having not recognised all the improvements made to homes post-2007.
And the insurers will win too. CERA will have thousands of claims to settle and hold ups will delay its plans for the red-zone. They’ll make bulk settlements to expedite things and the insurers will laugh all the way to the bank.
Effectively, the redzoners got ripped off and the insurers and CERA split the profits.
The unanswered question, though, is what will happen to the holdouts who have refused to accept either rip-off option when the offers expire. There’s talk of Brownlee shutting off utilities to these people which would surely trigger lawsuits but, as always with this government, no real thought seems to have been put into the issue.
Also, and I doubt you’ll ever see these words here again, good on the NBR. Journalists were invited to “join the party”in the carefully stage-managed launch of the CBD rebuild plan designed and timed to get uncritical coverage on the 6s. NBR simply refused to be part of the government’s PR machine and broke the embargo. Pity the other journalists allowed themselves to get caught up in the faux party that Brownlee threw.