NEW ZEALAND – Canterbury Earthquakes 2010 – 2011

On 4 September 2010, the Canterbury Region of New Zealand was rocked by a shallow 7.1 magnitude earthquake, 38km west of Christchurch City Centre. This triggered a sequence of major earthquakes, travelling east through the centre of the city and out into the Pacific Ocean.
On 22 February 2011, a high intensity 6.3M earthquake occurred just 5km beneath the Port Hills on the southern outskirts, leading to widespread destruction within the city and 185 fatalities.

The extremely high provision of insurance cover and multiple overlapping events created a uniquely challenging and complex situation, well beyond the experience and capacity of the local market.

FitzGerald Consulting was engaged by several major international Insurers and Reinsurers over the following five years to provide technical advice, claims management, loss adjusting and operational guidance.

Bev FitzGerald has been a guest speaker at several national and international conferences, talking on this subject, including both Holland and Kazakhstan in early 2017.


  • Christchurch is largely constructed on saturated alluvial deposits on the east coast of New Zealand’s South Island.
  • 4 September 2010 – 7.1M earthquake 10km deep and 38km west of Christchurch City Centre.
  • 26 December 2010 – 4.9M earthquake, whilst not of high magnitude, 5km deep directly under the city.
  • 22 February 2011 – 6.3M earthquake of high local intensity, 5km deep and 10km South East, causing major devastation in the central city and killing 185.
  • 13 June 2011 – 6.4M earthquake of high local intensity, 5km deep and 10km East South East.
  • 23 December 2011 – 6.2M earthquake, 7km deep and 10km East.
  • There were thousands of smaller aftershocks after each event.
  • New Zealand was a uniquely well insured seismically active location.
  • Distance and time difference between NZ and the main underwriting centres of UK, Europe, USA, Japan, Bermuda, Singapore etc. was an issue.
  • There was considerable overlap between damage from multiple events, partially repaired and/or inadequately assessed between each event.
  • Multiple primary policy and reinsurance periods were effected.
  • Insurers and reinsurers changed between events.
  • Domestic property was uniquely insured from ground up though bottom layer cover provided under a compulsory government scheme under the Earthquake Commission Act, which also covered damage to land.
  • When the first earthquake struck, the Earthquake Commission had only 22 staff in the whole of New Zealand. It received more than 400,000 claims on almost 200,000 properties.
  • The entire central city was cordoned off immediately after the 22 February 2011 event and not fully reopened for public access until 30 June 2013, 859 days later. Even then, several buildings remained individually fenced off, including Christ Church Cathedral.
  • The majority of buildings within the central city were demolished, not always due to the extent of earthquake damage, but through a commercial desire of landlords to rebuild to the new code.
  • The local insurance policy wordings were poorly drafted.
  • The technical and financial challenges for the insurance market were immense.
  • Local NZ claims operations, adjusters, engineers, surveyors etc. were completely overwhelmed.


  • FitzGerald Consulting was engaged by several major Insurers and Reinsurers between 2011 and 2016. This case study concentrates on the first of those appointments.
  • The UK head office of a major insurer with a substantial presence in Australasia had a small local office, but insured a disproportionately large number of high profile unreinforced masonry and heritage buildings.
  • The scale of damage was such that the Insurer’s claims office and local nominated loss adjusters were desperately in need of additional resource and direction.
  • Its reinsurance panel had changed between major events. Damage from the first earthquake had not been fully assessed.
  • The NZ subsidiary Insurer was in danger of its losses significantly exceeding its reinsurance coverage and failing to meet its liabilities.
  • The public authority was enforcing legislation requiring substantial seismic upgrade as part of reinstatement, a particular issue for our client, given the portfolio of property it insured.


  • Bev FitzGerald, Gerald Williams and Graeme Shurben attended and undertook an immediate review of the situation.
  • Under FCL’s control, the claims operation was re-structured and strengthened with experienced overseas claims managers.
  • International chartered loss adjusters were drafted in to oversee the largest and most complex cases in support of the local adjusting office.
  • Correct estimation and allocation of reserves between events was identified as being of key importance.
  • FitzGerald Consulting engaged an expert team of engineers and cost consultants to undertake a detailed methodology for allocation between events, for agreement with Reinsurers.


  • Our client was the first major insurer to settle its claims – in some cases by several years compared to its competitors.
  • FitzGerald Consulting identified that Christchurch City Council did not have a statutory right to demand substantial seismic upgrade as part of earthquake reinstatement. This subsequently led to the Insurance Council of New Zealand obtaining a Supreme Court ruling against the local public authority, saving all Insurers many NZ$ millions.
  • The allocation exercise successfully identified that the initial earthquake reserves from the 2010 events had been grossly underestimated, ensuring that the correct proportion of final cost was allocated to the correct reinsurance period.
  • Our overall reserve estimate, prepared in 2011, for our client’s total book of earthquake claims proved accurate when the final major losses were settled in 2013.


  • A major proportion of losses settled within 12 months, including the largest single site heritage loss in Christchurch.
  • Obtaining Reinsurer support to a reallocation of reserves and claim settlements to properly reflect the damage from each overlapping insured event.
  • Enabling the Insurer and its Reinsurers to meet their obligations in full without the Insurer becoming insolvent.
  • Protecting Insurers and Reinsurers from the public authority’s illegal attempt to enforce substantial seismic upgrades at Insurer’s expense.


  • FitzGerald Consulting was subsequently engaged by Reinsurers to oversee claims submitted by Christchurch City Council.
  • FitzGerald Consulting was appointed by Australasia’s largest Insurer in late 2014 to review its reserves and procedures, followed by a project which successfully and substantially accelerated the settlement of its portfolio of domestic claims.

CANADA – flooding in Calgary and Toronto June 2013

  • In June 2013, severe floods devastated the City of Calgary in the Canadian province of Alberta.
  • They were caused by unusually heavy rains combined with the melting ice cap from the Rocky Mountains, the result of which was that the Bow and Elbow Rivers burst their banks simultaneously.
  • The floods were declared by the Provincial Government to be the worst in Alberta’s history.
  • Five people were killed and a further 100,000 were displaced by the flooding.
  • Huge damage was sustained to high-profile sites such as the Calgary Zoo and the Scotiabank Saddledome, home to the Calgary Flames Ice Hockey Team.
  • Furthermore, in July 2013, there was a massive sewage back-up in Toronto which caused extensive flooding throughout the region.
  • It was immediately apparent that both these multi-million dollar CAT events would result in a high volume of complex commercial and domestic claims.

FCL appointed to oversee claims arising from both events…

  • After initial consultations with our Managing Director, Bev FitzGerald, FCL was appointed by a leading UK based insurer to oversee the handling of both the CAT events.
  • FCL Director Gerald Williams flew to Calgary to conduct initial site inspections, whilst Graeme Shurben, also an FCL Director, went to Toronto to commence file audit reviews and provide managerial assistance at the highest level.

FCL took control…

  • By deploying teams of experienced adjusters to assess the scope and complexity of the damage.
  • By conducting detailed inspections of the damage sustained at the ‘Top 10’ sites.
  • By liaising with reinsurers and by producing high-quality presentations and reports to insurers, enabling them to keep abreast of developments and manage their personnel.
  • By preparing cash-flow forecasts for re-insurers to ensure they were always aware of the extent of their potential liabilities.
  • By negotiating various cost-saving measures with external contractors.
  • By liaising with the client’s own Claims Examiners to assess and monitor the work of independent adjusters and ensure that claims were handled as quickly and professionally as possible.
  • By conducting file audit reviews and assessing the validity of reserves.
  • By providing an independent audit report highlighting technical issues.
  • Broducing a unified, cross-functional financial management reporting ‘pack’, to ensure
    smooth working between all the parties.

And managed both events…

  • Achieving early and smooth reimbursement of funds from reinsurers, either in advance or, on major loss cases, simultaneously to payments being made to policyholders.
  • Ensuring that reinstatement works were carried out as quickly and as efficiently as possible, thereby minimising potential business interruption losses and providing a huge morale boost to the City.
  • Making sure that Canadian regulatory controls were strictly adhered to and ‘best practise’ was achieved in all procedures.
  • Ensuring that all budgetary and financial concerns were treated in a transparent way and that costs were minimised wherever possible.
  • Maintaining excellent working relationships with all parties.

Illustrated by…

  • The manner in which the most high-profile site to be damaged, the Scotiabank Saddledome (which is the principle indoor arena in Calgary and home to the hugely popular ice hockey team, the Calgary Flames) was handled.
  • As well as hosting the Calgary Flames’ home games, the 20,000 seat arena regularly stages concerts and other prestigious events, with acts like Bruce Springsteen and Rod Stewart having performed there in the past.
  • Ensuring that both the external and internal reinstatement works were carried out as quickly and smoothly as possible was crucial as the potential Business Interruption losses were huge and far reaching. Due to it’s profile, the site was subject to intense media scrutiny which proved to be a crucial factor in determining the public’s perception of the manner in which the insurance industry was handling the disaster.
  • Under FCL’s supervision, the reinstatement works were carried out phenomenally quickly, with the arena opening in time for the beginning of the ice hockey season in September, just over two months after the floods occurred.
  • This was a significant boost to public morale as well as for the client.

And hailed as a tremendous success by the Market because…

  • FCL deployed all the experience and expertise gained from managing previous CAT events, to provide the Market with authoritative reassurance that the losses were in good hands and demonstrating that excellent settlements could be achieved without the need for recourse to litigation.
  • FCL contributed to the smooth recovery of one of the worst natural disasters in Canada’s recent history.
  • FCL proved that they have the resources required to work on more than one CAT at a time, as the work in Canada occurred whilst a similar assignment was being progressed in New Zealand following extensive earthquake damage.

CHILE – Restoring a country’s stability

2010 in Chile – a devastating earthquake…

  • Measuring 8.8MW on the Richter scale occurred at 03.34hrs local time on Saturday February 27th 2010, in South Central Chile.
  • 90 minutes later a tsunami inundated over 500kms of coastline.
  • 700 people were killed, 12,000 injured and 1,000,000 lost their homes or workplaces.
  • Shock waves caused damage in Santiago; over 400kms from the epicentre.
  • 250 aftershocks of magnitude 5.0 or greater were recorded.
  • Transport, telecommunication networks, power and water supplies were all severely disrupted, some for several weeks.
  • Initial estimates put the cost of the insured damage at more than $10bn and threatened the economic stability of the country.
Chile earthquake

Aftermath of the earthquake

FitzGerald Consulting reacted immediately…

Within hours Managing Director, Bev FitzGerald, secured instructions from the largest PD/BI Insurer in Chile, with over 20% market share, to assess the immediate requirements for what was clearly going to be major CAT operation.

Despite severe disruption to flight schedules following damage at Santiago International Airport, 48 hours later FCL’s CAT team was mobilized, taking with them the knowledge and experience gained from 9/11, hurricane Wilma in Mexico, the London bombings and the L’Aquila earthquake in Italy.

damage to shipping

Damage to roads and shipping was huge

And took control..

  • Winning significant customer confidence by being the first to arrive in Concepcion when immediate insight was gained into the scale and complexity of many of the losses.
  • Deploying a team of surveyors, engineers, accountants and agri-business specialists to support the client’s local and international claims handlers drawn from the UK, the US, Canada and the Far East.
  • Managing the setting up of a dedicated CAT ‘suite’ in Santiago, to log and handle over 30,000 loss notifications.
  • Meeting all local loss adjusting companies and specialist consultants to establish resources and expertise and chairing weekly meetings to monitor progress and development.
  • Issuing a series of guidance notes, initially covering procedural matters and latterly a range of complex technical issues.
  • Triaging loss notifications on criteria governing size, location, anticipated level of complexity and specialist disciplines.
  • Assisting the client with implementing dedicated internal reporting strategies incorporating an appropriate cascade of MI across all their relevant divisions and territories.
  • Monitoring the setting and review of reserves to allow identification of gross and net exposure levels in ‘real time’.
  • Controlling the provision of interim payments and, where possible, driving cases to early settlements which had the added benefit of promoting policyholder goodwill.
  • Inspecting and directing all losses where reserves exceeded $250,000 and reviewing/authorising reports on these cases.
  • Designing and implementing dedicated electronic filing systems to ensure ‘best practise’ and providing comprehensive audit trails.
  • Liaising directly with Re-insurers on all major losses, explaining the strategy and technical issues and confirming progress at Market Meetings, both in the UK and in Santiago.


  • Being able to confirm preliminary estimates of the overall exposure levels to the client’s Executive Board in under eight weeks.
  • The large number of claims that were driven towards early settlement providing a tremendous boost to the client’s brand awareness.
  • 25,000 home owners’ claims being finalised by July 2010; 98% of ‘Small & Medium’ claims by Dec 2010 and 75% of all major losses (over $250,000) before the first anniversary in February 2011 when claim payments totalled over $1billion.
  • All claims having been settled equitably between Policyholders, Insurers and Re-insurers without any recourse to litigation and only with minimal complaint.
  • Recognition that Chilean regulatory controls had been strictly complied with and ‘best practise’ achieved in all procedures.
  • The client receiving full support and rapid reimbursement from their Re-insurers from whom extremely complimentary comments were received.
  • The containment of experts’ fees and expenses to reasonable and budgeted levels.
  • The excellent ‘team spirit’ created at every level.


  • The largest single component of all the major losses concerned the Chilean wine industry; a major contributor to the national economy with Winery losses insured by our client totalling $500m.
  • One of the country’s principal wine exporters had over 45m bottles destroyed and severe damage was sustained to warehouses and vats used for fermentation and storage.
  • Priority concerns included bottle shortages and how to process the 2010 harvest – which was imminent.
  • Based on advice from FCL’s viticulture experts, effective mitigation measures were quickly agreed and supported by substantial interim payments thereby protecting Insurers and Re-insurers’ ultimate exposure.

These measures preserved one of Chile’s leading companies whilst, at the same time, a major source of foreign exchange revenue for the country was protected which, in turn, contributed significantly to the restoration of the country’s economy.


  • A major proportion of the losses being settled within twelve months, with outlays totalling in excess of $1bn.
  • 100% recovery of Re-insurers’ liabilities without delays, disputes or compromises.
  • During a Market Meeting the Re-insurers’ delegation stated that this was possible only because of their confidence in FCL’s expertise, management and reporting.
  • A strong endorsement of the client’s position in Latin America as the Chilean Regulatory Authority subsequently confirmed that they had demonstrated ‘market leading performance’ following this disastrous earthquake.
  • A significant contribution towards the rapid recovery of Chile’s economic stability.


‘This will be regarded as the template for managing CAT events worldwide. The feedback from my colleagues at RSA and within our re-insurer and Lloyd’s partners to FCL’s sterling work has been magnificent.’

Scott Webb, Group Technical Claims Director, RSA