As we approach the tenth anniversary of the Christchurch earthquake there are renewed calls for an inquiry into how Southern Response dealt with Canterbury earthquake claimants. Last year the government set up a support package for those who were short changed by Southern Response for their earthquake repairs. It came after a landmark High Court case found Southern Response misled and deceived Karl and Alison Dodds. Insurance claimants advocate, Ali Jones, says ten years on, lessons haven't been learned from how people were treated by Southern Response. She told RNZ reporter Sally Murphy that dealing with them is hell.
We aim to investigate the role of insurance in business recovery following the devastating Christchurch earthquake in February, 22nd, 2011. We analyze data from two business surveys conducted after the earthquake to examine how insurance affected business operation in the aftermath of the earthquake both in the short-term and longer-term. For the short-term analysis, we use a combination of propensity score matching (PSM) and linear probability model (LPM) to analyze the data. We first estimate the propensity scores for insurance take-up of each firm conditional on the firm’s individual characteristics. Stratification based on the estimated propensity scores is used to match the treated (insured) and the control (uninsured) firms. We then estimate the probability of firms’ continuing operations with a set of control variables to account for the level of damage and disruption caused by the quake in each stratum. We find little evidence of any beneficial effect of insurance coverage on business continuity in the short-run. For the longer-term analysis, we analyze the available survey data using logistic regression. The result suggests that business interruption insurance significantly promotes increased level of long-term productivity for surviving firms following the earthquake.
