Earthquake

Given that it is increasingly difficult to get affordable earthquake insurance, we may have to radically revise the system, economist Brian Easton says.

All you need is for the council to continue as normal and it will be empty in 10 years anyway due to lack of water, sewerage, and a dying CBD. We're not talking about the relatively low life-time risk of a volcanic eruption which might affect a small part of Auckland here. It worried that it might not be able to fund other costs associated with a major disaster, such as social welfare payments and the restoration of government facilities. That would have been the approach of the traditional welfare state. One is struck how the dominant criticism is from minimalists who see the levies as a tax, rather than a means of sharing the burden of adjustment across all workers. The $100,000 in 1993 would purchase about $200,000 of building construction today.) The rest of the earthquake protection has to be purchased from private insurers. Before, the essence of a dwelling’s earthquake recovery protection was a share scheme in which the risk was covered by the New Zealand government. In 1993 Earthquake Commission Act New Zealand made a dramatic change to its earthquake insurance changing the balance between share and shift. The second kind of insurance is said to have led to the development of Lloyd's of London. It is much more complex than this, but the important thing here is that there are these three responses: self, share (or social) and shift insurance. Observe that such social sharing can only work if the shock does not affect a large part of the group. But if the loss was your dwelling from an earthquake, you’d have to put aside its entire value, effectively doubling the cost of the house even though the probability of a total wipeout is low (or so you hope).