Departing EQC head defends performance

New Zealand needs a better system for handling recovery from natural disasters says the retiring head of EQC, the government's earthquake and natural disaster insurer.

David Middleton says local authorities have the power to stop people living in unsafe or unsanitary houses following a natural disaster, "but there are no provisions for looking after these people or for ensuring that their houses are restored to safe and sanitary conditions again."

Mr Middleton has headed EQC - the former Earthquake and War Damages Commission - since its separation from the old State Insurance Office in 1993, when that office was sold to private interests.

He regards the development of EQC's Catastrophe Response Programme (CRP) which spells out how EQC responds to natural disasters, as a major achievement.

The catalyst for this was the Northridge earthquake in January 1994 in a neighbourhood of Los Angeles. The earthquake killed 72 people, injured over 9000 and caused and an estimated $20 billion in damage.

The CRP, a cornerstone of EQC's operational strategy, was recently reviewed by an independent panel which backed the general approach but also made some significant criticisms and recommendations.

The review panel was led by Karen Stephens, the former emergency manager for Wellington City Council and included retired Australian General Peter Cosgrove (who had chaired the Queensland government's recovery taskforce following Cyclone Larry in March 2006.

The review panel criticised EQC's lack of understanding of the likely expectations of ministers, government agencies and the community about EQC's role in a major disaster and also its plans to handle a very large disaster, involving over 60 000 claims.

The review's findings and EQC's responses were made public midyear and in September Mr Middleton announced that he was stepping down in January 2010.

He said that there was no connection between the two and he denied suggestions that he or the organisation had failed or had lost the confidence of key stakeholders.

"Actually I thought it was a good review and so did the board, who commended us for getting such good marks from the review panel."

The panel's report refers to "a misalignment of role expectations between some areas of government and EQC."

Mr Middleton says that EQC has never had "clear signals from government as to what it wanted us to do, so we carried on with our own arrangements," which were based around handling up to 60 000 claims a year.

The review also criticises the lack of buy in by other agencies to EQC's approach. Mr Middleton says that EQC had set targets and performance measures but had not got input from government agencies as to whether these were acceptable.

"We take it on the chin, but it was not our fault. I spent a lot of time explaining what we didn't do."

The review panel was also concerned that there was "minimal collaboration with private sector insurers"

"There is fault on both sides," says Mr Middleton

"We are one of a very few organisations that has to concentrate on dealing with a disaster. Talking to government and insurers, it's not their priority. They have made the right noises about focusing on our business but it never happened."

To the criticism that EQC did not have good understanding about how long it would take to process claims in a major disaster , Mr Middleton said "I accept the criticism that for claims over 60 000 in a year we do not have concrete plans.

"The review panel urged us to have a Plan B. That was anathema to us. All our experience told us that Plan Bs are a waste of time. However EQC will now be working harder to understand the constraints on its capacity to process claims.

The upshot is that Middleton is leaving but he trenchantly maintains that his move is voluntary and he denies suggestions that he lost the confidence of his board, which is chaired by former SSC head Michael Wintringham.

"I didn't see see this as a particularly critical review. I read it more as well you've been doing these things for a number of years and this is where you should now take it from here.

'I am leaving because it is time to do something else. I would like a change and this is a good time to do that.


Published in the National Business Review of 18 December 2009