Part 4: Homeowners' experiences of the home-repair programme
4.1
In this Part, we describe what EQC has learned, through surveys and complaints mechanisms, about homeowners' experiences of the home-repair programme. We discuss homeowner:
4.2
We also discuss matters that could negatively affect homeowners' experiences of the home-repair programme.
Summary of our findings
4.3
Before 2013, EQC did not collect customer satisfaction information specific to the home-repair programme. In our view, it should have. In 2013, EQC's surveys, carried out just after repairs were completed, report that many homeowners were satisfied or very satisfied with those repairs.
4.4
However, it is clear that the service experience has been poor for some homeowners despite the completion of many repairs and EQC's reported levels of homeowner satisfaction in 2013. There have been issues with the consistency and timing of communications about individual circumstances, the transparency of EQC's decision-making, and the quality of repair work. EQC knows that it has to continue to improve communication with homeowners about their claims.
4.5
The management of complaints within the home-repair programme needs to be better integrated between EQC and Fletcher Construction.
4.6
There was considerable inconsistency in the repair process and in the information recorded (including about contact with homeowners) in the files we reviewed when we visited repair hubs.
Homeowner well-being and satisfaction
In February 2013, EQC started surveying the satisfaction of homeowners who had just had their repairs completed. In our view, this work started too late. Communication, the availability of information, and the quality of repairs have been issues for homeowners.
Homeowner well-being
4.7
Fletcher Construction identified that, as well as the quality, safety, time, and value-for-money goals in its service agreement with EQC, there is also an "implicit" homeowner well-being goal.
4.8
Many of the people EQC is dealing with are living in challenging and stressful circumstances. Some have lost family or friends because of the earthquakes. Many have endured multiple earthquakes, had their lives disrupted, and lost homes and items of great personal value. Life has not been easy, and there are heightened levels of stress and anxiety in the community.
4.9
In October 2012, a survey by the Canterbury Earthquake Recovery Authority found that 65% of greater Christchurch's residents reported having to deal with EQC and/or with insurance matters about personal property and houses. More than half of those people (37% of greater Christchurch residents) reported that they have experienced a moderate or major negative effect on their everyday lives from dealing with these matters. The Canterbury Earthquake Recovery Authority told us that, in April 2013, the percentage had fallen to 26%.
4.10
Because the information is combined, we cannot be definitive about how much of that negative effect can be linked to how EQC is managing the home-repair programme.
4.11
Fletcher Construction told us that, in its experience, "stress levels rise from uncertainty as to timing, or a lack of information from which to make decisions, more so than stress relating to the effects of damage from the under $100,000 nature of this programme".
Overall homeowner satisfaction
4.12
Figure 13 shows the percentage of homeowners surveyed by EQC who, overall, said they were satisfied or very satisfied with the home-repair process.13 It did not look at satisfaction with EQC's services other than the conduct of a repair, and was carried out by EQC staff. The surveys did not look at the satisfaction of homeowners who:
- had repairs completed before February 2013;
- had repairs in progress at the time of the survey; or
- were still waiting for repairs to start.
Figure 13
Percentage of surveyed homeowners who were satisfied or very satisfied overall with the home-repair process, February to August 2013
| Date repairs were completed | February to April 2013 | 22 July to 28 July 2013 | 29 July to 2 August 2013 | 5 August to 10 August 2013 |
|---|---|---|---|---|
| Percentage satisfied or very satisfied overall with the home-repair process | 82% | 77% | 83% | 84% |
| Number of people invited to participate in the survey | 987 | 120 | Not available | Not available |
| Number of respondents | 769 | 100 | 112 | 109 |
| Margin of error | +/- 3% | +/- 9.8% | +/- 9.2% | +/- 9.3% |
Source: EQC.
4.13
As well as identifying satisfaction with the home-repair programme, the surveys also identified dissatisfaction. If the dissatisfaction rate from early 2013 was applied to the total number of homeowners in the programme, the owners of more than 14,000 repaired houses would be dissatisfied (and about 66,000 would be satisfied). Some of this dissatisfaction could stem from a gap in expectations between homeowners and EQC, which we discuss in paragraphs 4.47-4.48.
4.14
As part of these surveys, homeowners were asked to provide improvement suggestions or feedback. The six areas most frequently identified for improvement (between February and April 2013) were:
- communication;
- time frames;
- quality of contractors;
- clean-up of repair site;
- more information required; and
- quality of repairs.
4.15
These issues were also raised during our discussions with homeowners and community groups, and in correspondence to our Office from members of the public.
4.16
Before the telephone surveys began, EQC sought to understand claimants' experiences with its services through other research. This other research has mostly been of all of EQC's claimants, including those within the home-repair programme. This means that this other research is at best indicative, rather than definitive, about the experiences of homeowners in the home-repair programme.
4.17
For example, in 2011/12, there were four UMR Limited claimant satisfaction surveys, three UMR Limited qualitative surveys of Canterbury claimants, and four (quarterly) Nielson Market Research polls.
4.18
Figure 14 draws on information from all of EQC's claimants, including those with dwelling claims. It uses the fourth quarter of 2010 because this was when the first major earthquake struck Canterbury, and the fourth quarter of 2012 because this was the latest information available before EQC started to separately survey those in the home-repair programme.
4.19
Figure 14 shows that, excluding the time taken to settle a claim, just over 60% of EQC's claimants were satisfied or very satisfied with EQC's service over four high-level measures of EQC's activities. The overall level of satisfaction with EQC's services assessed against these dimensions fell slightly between 2010 and 2012.
Figure 14
Percentage of surveyed respondents who were satisfied or very satisfied with aspects of EQC's performance, 2010 and 2012
| Topic | 4th quarter 2010 | 4th quarter 2012 |
|---|---|---|
| How the claim was processed | 54% | 51% |
| The way the damage inspection was carried out | 57% | 66% |
| The way EQC handled the claim when it was first made | 74% | 68% |
| The overall quality of service delivery | 63% | 59% |
| The time taken to settle claim | 52% | 42% |
Source: EQC.
4.20
In the fourth quarter of both 2010 and 2012, EQC's claimant research showed that about a third of its claimants identified that there were no areas of EQC's work that needed to be improved. Other claimants identified areas for improvement. Communications and settlement time frames were the areas for improvement that were most frequently identified.
Communication with homeowners
EQC knows that it needs to continue to improve communication with homeowners about their claims. Homeowners need as much certainty as early as is possible about their individual circumstances.
4.21
EQC has used its website, the media, its community contact centre, social media, an outbound calling programme, and EQC staff attendance at public meetings to communicate with homeowners.
4.22
EQC knows that it needs to continue to improve communication with homeowners. EQC has previously acknowledged publicly that it has provided conflicting and inadequate information to claimants.
4.23
EQC was planning, beginning in February 2013, to send letters to claimants providing information about the status of their claims. EQC's Chief Executive has subsequently indicated that the shutting down of EQC's systems after a privacy breach delayed the time frame for informing claimants. Subsequently, EQC has completed a 90-day programme for communicating with all claimants about their claims and is intending to continue its communication programme with these claimants.
Complaints about the home-repair programme
Complaints have been made directly to EQC and to other organisations about the home-repair programme. EQC needs to better integrate how complaints are managed between EQC and Fletcher Construction.
Complaints to EQC
4.24
EQC needs to do more to analyse and learn from complaints and better integrate complaints management processes and systems with Fletcher Construction. The number of complaints received was one means by which EQC intended to judge the success of its performance in response to a large-scale natural disaster.
4.25
Figure 15 shows the number of complaints received by EQC's Complaints Investigation Team from September 2012 to August 2013 about the home-repair programme. The number of complaints has been increasing, including complaints about the quality of repairs. These figures do not necessarily include complaints to Fletcher Construction, because the complaints systems are not fully integrated. Also, the information excludes disputes between EQC and claimants about the scope of works.
Figure 15
Number of complaints received monthly, by category, from September 2012 to August 2013
Source: EQC.
4.26
Overall, the Complaints Investigation Team received 1,265 new complaints during the period. Many (62%) of the complaints were about the quality of the repairs, and 21% were about the repair time frame. According to EQC, redecoration work lends itself to a risk of dissatisfaction.
4.27
EQC and Fletcher Construction began integrating complaints information from late November 2012, but their complaints systems were not technically connected. There were inconsistent complaints processes between repair hubs.
4.28
EQC identified two actions to improve complaints management, in response to the findings of the May 2013 internal audit of the programme:
- a review of EQC's complaints process based in Wellington, before complaints are transferred to Fletcher Construction when that is necessary; and
- a "follow-up" to the process used from November 2012 where claims not resolved within 10 days by Fletcher Construction are referred back to EQC.
4.29
The internal audit work confirmed that these actions have been carried out.
4.30
EQC set up a mediation service14 in the second half of 2012, and has met with various stakeholder groups. A regular formal consultation forum with these groups has been held since September 2012.
| Recommendation 2 We recommend that the Earthquake Commission continue to improve communication with individual homeowners about their claims, giving homeowners as much certainty as possible as early as possible. |
Complaints to other organisations
4.31
Because of the technical and complex nature of EQC's and other public entities' responsibilities in the recovery efforts for Canterbury, resolving complaints about an entity's performance can require specialist and professional expertise and full knowledge of the circumstances. Where complaints cannot be resolved directly with an entity, there are a range of other organisations that people can contact. We have listed these organisations in Appendix 4.
4.32
Our Office is one of the organisations listed in Appendix 4. Our interest lies in the effective and efficient use of resources by public entities, including those working on the recovery in Canterbury. We cannot attempt to resolve individual disputes with public entities, including individual disputes with EQC.
4.33
On 20 April 2013, Fairfax News reported that a spreadsheet attached to a leaked email indicated that EQC had overpaid earthquake claims by up to $100 million. This matter was raised with our Office and was the subject of widespread media coverage.
4.34
In response to this, EQC's Chief Executive, Ian Simpson, issued a press release on 23 April 2013. He refuted the allegation on the basis that the spreadsheet "was never regarded as fit for purpose by EQC management and, because it had no practical value, its maintenance was discontinued and staff were instructed not to use it."
4.35
We considered it appropriate to extend the financial audit work on claims payments as part of our 2012/13 financial audit of EQC (work that is separate from this performance audit). The Appointed Auditor carried out audit procedures on a large audit sample of EQC payments. They did not identify any material matters that would have required audit adjustments to the 30 June 2013 financial statements.
Matters that could negatively affect homeowners' experiences
During our audit, and from complaints received by our Office, we saw a lack of clarity, consistency, and transparency in EQC's systems and decision-making that could, in our view, negatively affect homeowners' experiences of the home-repair programme.
Systems and capacity
4.36
EQC's systems and capacity have not been capable of supporting interaction and information sharing that the public was expecting or of coping with the volume of requests under the Official Information Act 1982 (OIA requests) made to EQC after the Canterbury earthquakes.
4.37
EQC is not fulfilling its statutory requirements for timely responses to OIA requests. Some requests made to EQC under the Official Information Act may be claimants trying to fill an information gap about their individual circumstances.
Availability of private information
4.38
As already noted, EQC has breached the privacy of its claimants more than once. The details of the privacy breaches have been widely reported in the media. We did not look at privacy breaches as part of our audit. The Privacy Commissioner is the appropriate authority to investigate them.
Unavailability of information
4.39
EQC's withholding of individual home-repair cost estimate information has been the subject of a complaint to the Office of the Ombudsman. The Ombudsman found that, under section 9(2)(i) of the Official Information Act, EQC had good reason to withhold cost estimates. This was so that EQC (or Fletcher Construction on EQC's behalf) could carry on negotiation with contractors without prejudice or disadvantage. (The Ombudsman's decision was specifically about houses in, or likely to be in, the home-repair programme.)
4.40
The Office of the Ombudsman is the appropriate authority to investigate and comment on matters with the provision of information under the Official Information Act.
4.41
There has been inconsistency in the information provided to claimants about the scope of works and variations to the scope of works. This includes some claimants being asked to sign off on work that they were not aware was to be performed because they were not given the scope of works.
Lack of operational policy
4.42
There has been a relative paucity of operational policy guidance available to homeowners and to EQC staff, indicating how EQC goes about applying the provisions of the Act when settling a claim and repairing a home.
4.43
Although operational policies do not replace the need for staff to consider the application of the Act to the relevant facts of each case, they can help streamline the decision-making process and give claimants confidence that their repair is being managed in a manner consistent with those of people in similar circumstances.
Changes to operational policy
4.44
Originally, EQC had a policy of not allowing homeowners to organise and pay for insulation to be added when repair work was carried out, even though that repair work might expose cavities in which insulation could be installed. EQC later changed that policy to allow insulation work to happen simultaneously with repair work.
4.45
Changes in policies such as this may be understandable because of the challenges faced by EQC in balancing the differing expectations of EQC's stakeholders, and the complexity of technical, liability, equity, safety, and administrative matters with such policies.
4.46
Although we do not have a view on the appropriateness of the policy, the change in policy has potentially disadvantaged homeowners who might have wished to, and could have afforded to, install insulation at the same time as repair work was carried out.
An expectation gap between EQC and homeowners
4.47
The Act states that EQC can pay out funds only for the purposes of replacing or reinstating a house to a condition that is substantially the same as, but not better or more extensive than, its condition when new. EQC describes this as a "like-for-like basis". EQC's application of the Act has been the subject of differences of opinion between it and homeowners, resulting in an expectation gap. The Act also states that EQC "shall not be bound to replace or reinstate exactly or completely, but only as circumstances permit and in a reasonably sufficient manner."
4.48
Part of the expectation gap stems from different interpretations of the standard of repair required under the Act.15 Part stems from unrealistic expectations (for example, aspects of a house should be improved when there is no change in building code requiring that), and part stems from areas of genuine dispute (for example, homeowners wanting a different method for repairing the damage from that chosen by EQC, or EQC disputing whether damage is earthquake-related).
Inconsistencies in repair files
4.49
There was considerable inconsistency in the repair process and in the information recorded (including about contact with homeowners) in the files we reviewed when we visited repair hubs.
4.50
This is a consequence of EQC concentrating on getting repairs done before supporting systems and controls had been fully prepared and implemented. It meant that we determined that a more comprehensive review of EQC files at that time would not have been a productive use of our resources.
13: This level of satisfaction is similar to that reported by Fletcher Construction (86%) for recently completed repairs, as reported in The Press on 25 August 2013 and based on a survey by UMR Limited of 200 people.
A recent survey of satisfaction with completed home repairs in Canterbury was reported in The Press on 23 August 2013, based on an Opinions Market Research survey of 400 people. The survey was of all repairs, not just those completed within the home-repair programme. It reported a 37% level of dissatisfaction (dissatisfied or very dissatisfied with the repair results).
We have not reviewed the methodology of either of these two surveys as part of our audit work.
14: See www.eqc.govt.nz/about-eqc/make-complaint/mediation-service.
15: The courts are the appropriate mechanism for determining the requirements of the Act.
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