Dispute delays flood payouts

When does a landslip become a flood?

That's the multimillion-dollar impasse between the Earthquake Commission and the insurance industry over the storm damage that laid waste to much of Matata in the eastern Bay of Plenty three months ago.

If it was a flood, the commission is not liable. But under the terms of its legislation, it meets the first $100,000 for any house damage and $20,000 in house and contents damage caused by landslip.

With more than 200 houses damaged and 31 ruled unsuitable for rebuilding, many residents are still waiting to determine their futures.

Claims for compensation from the commission must be lodged by tomorrow.

In a report for the Whakatane District Council, the Institute of Geological and Nuclear Sciences said the heavy rainfall on May 18 - estimated to be a once in 500-year occurrence - triggered many landslips and several large debris flows.

These, with their associated flooding, caused extensive damage in the coastal town.

Commission insurance manager Lance Dixon said yesterday that "debris flow" was a new term as far as his organisation was concerned and was not defined in the Earthquake Commission Act.

"We do not have discretion under the act to pay out.

"It is up in the air. We have said all along we will need to talk to the insurance companies on who is going to pay."

He had written to about 10 insurers suggesting that they meet house and contents claims, the commission pay land compensation and the matter of liability be worked out case-by-case at a later date.

Mr Dixon said some houses clearly had water through them and others had debris, which might have come from a nearby stream or a hill behind the property.

If Matata people were insured, it did not matter to them what caused the damage - they needed to be compensated so they could move on with their lives.

He believed there could be a single cause of damage to some properties and multiple causes for others. When it came to determining individual cases, more expert advice might be needed.

"I think it will be difficult to say there is one particular cause for the event," Mr Dixon said.

Where the situation was more clearcut, the commission had already settled 60 of about 140 Matata claims.

Insurance Council chief executive Chris Ryan said the Earthquake Commission "generally speaking" did not accept that there had been a mudslide, despite at least three geotechnical reports to that effect.

Frustrated by the deadlock, many insurance firms were paying out to Matata residents to prevent prolonged suffering and further delay.

"We are very disappointed with the commission," said Mr Ryan.

"The insurance industry will take it on the chin and pay the Earthquake Commission share as well," he said.

Efforts would be made to recover that money later, through legal channels if necessary.

Meanwhile, more than 20 Matata property-owners have appointed Whakatane lawyer Frank Cain to act for them.

He said it was in an advisory capacity initially.

* One of the authors of the Geological and Nuclear Sciences report, Dick Beetham, said yesterday that debris flow was a recognised term used for some time to describe a type of landslide. Other debris flows had occurred in New Zealand, but probably none as destructive to a community as the one at Matata in May.