Insurance as a Double-Edged Sword: Quantitative Evidence from the 2011 Chr…

Research papers, Victoria University of Wellington

We examine the role of business interruption (BI) insurance in business recovery following the Christchurch earthquake in 2011. First, we ask whether BI insurance increases the likelihood of business survival in the immediate (3-6 months) aftermath of a disaster. We find positive but statistically insignificant evidence that those firms that had incurred damage, but were covered by BI insurance, had higher likelihood of survival post-quake compared with those firms that did not have any insurance. For the medium-term (2-3 years) survival of firms, our results show a more explicit role for insurance. Firms with BI insurance experience increased productivity and improved performance following a catastrophe. Furthermore, we find that those organisations that receive prompt and full payments of their claims have a better recovery than those that had protracted or inadequate claims payments, but this difference between the two groups is not statistically significant. We find no statistically significant evidence that the latter group (inadequate payment) did any better than those organisations that had damage but no insurance coverage. In general, our analysis indicates the importance not only of adequate insurance coverage, but also of an insurance system that delivers prompt claim payments. This is a post-peer-review, pre-copyedit version of an article published in 'The Geneva Papers on Risk and Insurance - Issues and Practice'. The final authenticated version is available online at: https://doi.org/10.1057/s41288-017-0067-y. The following terms of use apply: https://www.springer.com/gp/open-access/publication-policies/aam-terms-of-use.

BeckerFraserPhotos February 2011 photograph 225

Images, UC QuakeStudies

An empty house on Avonside Drive. The overgrown lawn indicates that the house has been unoccupied for some time as a result of the 4 September 2010 earthquake.

Helen Devereux Photograph 085

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

BeckerFraserPhotos February 2011 photograph 218

Images, UC QuakeStudies

An empty house on Avonside Drive. The overgrown lawn indicates that the house has been unoccupied for some time as a result of the 4 September 2010 earthquake.

QuakeStory Photo 268

Images, UC QuakeStudies

A photograph submitted by Jo Reid to the QuakeStories website. The description reads, "The clock on the intersection of Montreal St, Victoria Street and Salisbury Street just after February 22nd. The time froze.".

BeckerFraserPhotos December 2011 photograph 0175

Images, UC QuakeStudies

Photograph captioned by BeckerFraserPhotos, "The Edmonds Clock Tower, Oxford Terrace, stopped at 12.51, the time of the 22 February 2011 earthquake".

UC QuakeBox photograph by Sally Roome (4)

Images, UC QuakeStudies

The Brooklands Community Hall with the UC QuakeBox parked in the car park. A sign with the opening time has been placed on the other side of the road.

Helen Devereux Photograph 068

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 069

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 074

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 082

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 078

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 079

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 083

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 076

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 071

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 077

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 072

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 073

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 086

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Helen Devereux Photograph 088

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. A partial view of the Hotel Grand Chancellor.

Helen Devereux Photograph 093

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. A partial view of Christ Church Cathedral.

Photograph of Gap Filler project 16 (23)

Images, UC QuakeStudies

The entrance to Gap Filler's temporary cinema 'The Night Club', with doors created by lights, a light sculpture and a screen where 'Play Time' is being projected.

Helen Devereux Photograph 075

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Rebekah Rogers WEMO Photograph 040

Images, UC QuakeStudies

A photograph of a packet of food supplied to the Student Volunteer Army. The pack includes muesli bars, a Cookie Time cookie, salted peanuts, crackers, a chocolate bar, and other items.

Helen Devereux Photograph 084

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

BeckerFraserPhotos April 2012 photograph 267

Images, UC QuakeStudies

The Pacific Tower building on Gloucester Street, with repairs to cracks visible down one side. Constructed in 2010, the Pacific Tower was at the time the tallest building in Christchurch.

Bettina Evans's photograph 58

Images, UC QuakeStudies

The TimeBank book swap in front of the library. As the library has been closed since the earthquake, members of the community put together a book swap service which was later continued in the information centre.

Helen Devereux Photograph 067

Images, UC QuakeStudies

For the first time in November 2011, Christchurch residents finally had the opportunity to see the earthquake-damaged city centre on the Red Zone bus tours organised by CERA. Damage to buildings can be seen out the window.

Rebekah Rogers WEMO Photograph 106

Images, UC QuakeStudies

A photograph of a sign in the window of a café in Merivale. The sign reads, "To all my very loyal customers, thank you so much for your custom over the past three years. As much as I have enjoyed the previous three years it is time for me to move on especially to spend more time with my two young daughters. On a brighter note, Paul from Chicotis (198 Papanui Road) - I'm sure most of you will already know him - will be taking over very soon and will continue to trade as Chicotis. I wish Paul all the very best and thank you again for your support of Makibo Cafe.