New Zealand's open-ended insurance policies are another delaying factor. In most markets houses are insured for a fixed amount. Until recently the practice in New Zealand - effectively, only in New Zealand - has been to insure for replacement to an agreed size. This means there are additional stages to the claims process that add time.
Another complication is waiting for decisions about the viability of land. The poorer the land, the longer the investigations into the need for remediation.
MacGregor says his conversations with the re-insurers confirm Christchurch is one of the most complex insurance events in recent years. It didn't help that the city experienced multiple earthquakes and that until now the poor quality of much of the land around the city was poorly understood.
Rose shows statistics which indicate one of the biggest causes of delay is that householders believe their house needs a rebuild, when it can be repaired. This takes time to work through; in many cases it means using external advisers.
There are also problems with apartments or town houses where a number of homes are immediately next to each other or share walls and other features. Householders often have different policies and various agencies have to be co-ordinated. Rose has a chart showing 11 different organisations, many with subcontractors or departmental lines of communications. Getting them all on the same page is far from trivial.
MacGregor says there's little incentive for insurers to drag their feet on payments: "In fact the open-ended contracts means an insurer carries the risk of inflation; the longer a claim takes the more it could end up costing us". He says there are other costs associated with a delay.
Rose says the open-ended nature of many insurance policies effectively means each claim becomes a protracted negotiation. Though that might be manageable when there are a handful of claims in progress, it has become a major stumbling block.
He says a further delay comes when householders get notification.
He says suddenly they have to make some big decisions. This can be troubling at the best of times, but many of them are traumatised, some are elderly and confused, and another group is still waiting to hear from the EQC for land value compensation.
Things are substantially different with commercial policyholders. The majority have already been paid, with claims to date amounting to more than $2 billion. Ports of Lyttelton collected $438 million, the largest payout in New Zealand history. MacGregor says IAG has completed about 80 per cent of its commercial claims.
Southern Response and IAG have both engaged builders to handle extensive rebuild programmes. Southern Response is close to Arrow, so close the two share a building. Rose says the relationship means his organisation can act faster and is much closer to the sharp end of the house-building market. He says it is Southern Response's preference to rebuild rather than settle with a case payout.
Both insurers say they are working to speed up settlements. MacGregor expects matters to move faster now. "We've worked through two years of complexity. We've managed to resolve a lot of those issues and we've found ways to get around the roadblocks. Now we need to scale up the rebuild. Work is set to peak this year and our focus is now about moving to a conclusion".
MacGregor says IAG has a framework to determine which policyholders get priority. He says: "It's based on people's needs, we've found most people are OK with that".
He says IAG is now allowing policyholders to move ahead with their rebuilds before settling EQC land claims. He says: "If remediation work is needed, we'll get on with it by taking a deed of assignment on the land as security". He also says while IAG would prefer to build, he can understand policyholders not wanting to wait, so it is giving them the option of a cash payout".
MacGregor says IAG still has a more aggressive target of the end of 2015 to have its residential programme completed. "However that's now looking optimistic. When we set the date 18 months ago it looked possible. Since then we've seen a significant rise in over-cap claims, so we may not meet the deadline".
The Christchurch earthquake has put an end to New Zealand's open-ended insurance policies. Rose says from now on, householders will only be able to buy sum insured policies.
MacGregor says the change to sum insured will have the advantage of making policyholders aware of the need to get adequate cover. He also says that despite the negative news about his industry, the Christchurch earthquakes have raised awareness of the need for cover.
He says everyone here has always been aware New Zealand is a seismic country. So perhaps the longest lasting effect of the February 2011 earthquake on New Zealand insurance is that everyone else knows it.
Says MacGregor: "Before now we didn't attract much attention from the re-insurance sector. Now they're taking more notice of the country and spending more time assessing the risks. That's likely to lead to an increase in premiums."
Slow progress
Insurance companies are still in the firing line for the way they've handled claims following the Christchurch earthquake. In particular there have been accusations that insurers are dragging their feet when it comes to making decisions and paying claims.
There's little question Christchurch residential insurance settlements are slow by international standards. The Insurance Council of New Zealand data published earlier this year showed that three years after the February 2011 earthquake insurance companies have only completed 15 per cent of rebuilds. Roughly a quarter of all claims have been paid.
Compare this with Chile where 100 per cent of claims were paid two years after the February 2010 earthquake. And a 91 per cent payout in Japan after that country's 2011 earthquake.
Many Christchurch residents question whether the insurance companies will meet the promised target of settling 90 per cent of residential claims by 2016 - that's five years after the event. Insurance companies respond by saying rebuilding will pick up steam this year.
Earlier this month a group of Southern Response claimants announced plans to launch a class action against the insurer arguing the company was in breach of contract.
Southern Response is a government-owned claims management operation formed after the failure of AMI. Its task is to settle AMI policyholder claims.
Chief executive Peter Rose says when the roughly $3 billion of claims are settled, the organisation will cease to exist.
