Asymmetric information, EQC edition

26/03/2013 § 7 Comments

It turns out that EQC knows exactly what it’s doing. It knows exactly what damage has been done to our properties, what the engineers’ assessments are, and a whole lot more. And all the data is available in a handy spreadsheet. You and I just don’t get to see it.

Information is power. In this case, power over people’s house and lives.

Three thoughts:

  • This is the problem with the public agency insurance model. Is it an insurance company? Is it a government department? It’s neither and both. They are screwing down the claims as much as they can, like a private company, but they get to set their own rules, like a government department. And us, the consumers/citizens? High and dry, baby.
  • One of the clients of the man who incorrectly received the spreadsheet, Bryan Staples, was paid only $30,000 when EQC knew there was $55,000 to $59,000 of damage. How is a homeowner, a non-expert in building matters, supposed to know how much damage has been done and what it’s worth? EQC is using its expert information, rather than dealing with claimants in an honest and open manner. Last year, another state-owned insurer, ACC, had bonuses for cutting people off. That is, bureaucrats were paid to screw down claims. Is this happening in Christchurch?
  • I’m not so concerned about fraud — I think Eric Crampton’s right about that. I’m more angry that EQC has produced a handy guide that only insiders get to see. An enterprising individual could go around the city with inside knowledge of houses and assessments and figure out which houses are underpriced and overpriced. Or, some variation on the ‘nice little house, shame about the earthquake damage’ could push prices down artificially.

The story isn’t about someone accidentally sending the wrong email. The story is the spreadsheet and the secrecy. And the damage being done to the people of Christchurch.

Advertisements

Tagged: , , , ,

§ 7 Responses to Asymmetric information, EQC edition

  • There’s a non-conspiracy potential explanation on the cost-screw-down: suppose they just pad all estimates with a “What if the repairs are more substantial than we thought?” contingency? Then, the $30k could represent the actual cost of the work undertaken, but they were scared that more work could have been needed that could have doubled the cost.

    I have no clue if that’s the real story; I’m not a quantity surveyor. But it’s not a 0% probability either.

    On the whole though, agreed. Privacy angle is the least important bit. That they have a simple file on each claim that the could deliver in response to OIA requests and that they have refused to take the five minutes per claim to do so: heads should roll, and not that of the woman who sent the email.

    • Bill says:

      That’s a good point and should temper my paranoia. In this particular case, the work done was valued at $55k, close to the EQC estimate of $59k, but the homeowner received only the $30k.

      Also, the assessments are very detailed (as you know) — x metres of wall, y light fittings, etc. A more transparent method than padding the estimates would have an estimated cost and then an allowance for variation. You’d get much more information that way when you went to analyse the data.

      • If EQC had itemised things that added up to $59k and those were the same things that were done, then the paranoid state of the world is the right one. If EQC had some line item total that could have included provision for “Ah, crud. When we opened up the walls, we found all the studs had shaken apart.”, then we don’t know which state we’re in.

  • James Hogan says:

    Hi Bill,
    I notice EQC is listed in Schedule 1 of the Ombudsmen Act 1975, which makes it a “department” within the Official Information Act which opens it up for an OIA request under section 12 of the OIA 1982.

    This means anybody affected by a EQC has a prima facie right to EQC’s information, unless there’s a really good reason otherwise. Now the Christchurch residents know about EQC’s file on EQC’s assessment of their claims, I’m wondering whether any legitimate reason exists for EQC withholding a claimant OIA request.

    I take you point though – would anybody have known to ask unless there was a breach of privacy? Only under rocks and dark places does slimey things grow…

    • Bill says:

      Hi James –
      I didn’t know about the Schedule 1 list, so thanks for pointing that out. Eric (offsettingbehaviour) discussed the OIA issue yesterday. It certainly sounds like EQC is flouting the law. But then, the recovery effort was exempted from several laws when it got going. That exemption was sold as necessary for a quick and efficient recovery. Now we are learning it was a CYA provision.
      Still, the mere knowledge of the existence of EQC spreadsheet has changed things. Now the public knows that EQC does have the data, ready to go, at its fingertips.

  • […] There are potentially innocuous explanations for the discrepancy between the cash settlement Bryan Staples cites and EQC’s cost estimate: it’s not implausible that EQC budgets include padding in case the repairs are more substantial than expected, and that the cash settlement did reflect the real damage. Or it could be that they’re just screwing down costs. […]

  • […] There are potentially innocuous explanations for the discrepancy between the cash settlement Bryan Staples cites and EQC’s cost estimate: it’s not implausible that EQC budgets include padding in case the repairs are more substantial than expected, and that the cash settlement did reflect the real damage. Or it could be that they’re just screwing down costs. […]

What’s this?

You are currently reading Asymmetric information, EQC edition at Groping towards Bethlehem.

meta

%d bloggers like this: