Should there be any further natural disasters - earthquakes, volcanic eruptions, tsunamis, for example - there will be no money in the kitty to pay for them.
The Government, which is a primary guarantor of the EQC's commitments at such times, would have to reach into its own pocket to pay for any damage. And as the electorate is constantly told, the state of the economy and of the country's external debt liabilities is such that this would prove calamitous.
The EQC was established by the Government in 1945 to provide earthquake and war damage cover for purchasers of fire insurance. Later, cover for other kinds of natural disasters was included and that for war damage dropped.
Today, the EQC is a Crown Entity.
For the 60-plus years of its existence it has been collecting premiums from insured people and saving up against future adverse events. One of those events happened in Christchurch on September 4 last year, another on February 22 this year and yet a further one on June 13. While the initial costs were estimated to be manageable, this week's revisions show they will in fact drain the fund's reserves.
Following the quakes of September and February, costs were estimated to be in the region of $3 billion. The revisions reveal gaping underestimates, particularly with respect to the February shock. Of the $4 billion additional insurance costs, a further $2.17 billion has been attributed to this quake; $1.42 billion is the estimated cost of the damage from the June quake, and re-evaluations from elsewhere add a further $430,000. The number of houses in the city thought to have been badly hit has risen from 10,000 to about 30,000.
What is to be done both in the short term to rectify the situation whereby the Government has no reserves at all to meet any further disasters, and in the longer term to address the increasingly problematic question of steeply rising insurance premiums?
Reinsurance has become an issue for the several large overseas companies that have traditionally stood behind the industry in this country. Storms and floods in Australia, the earthquake and tsunami in Japan and the series of severe tremors that have shaken Christchurch to its core have together raised a cloud over "risk" in this part of the world.
To this end, Canterbury Earthquake Recovery Minister Gerry Brownlee and a host of officials are heading to Europe to persuade the industry that we are indeed a safe bet. In his armoury will be a number of practical intentions such as redrawing the building codes to higher more "shock-absorbent" specifications; and restricting rebuilding to only very stable land.
But how much of a sop to the industry this will prove and just how effective it will be is another matter. The Green Party idea of a disaster levy, dismissed out of hand several months ago by the Government, begins to seem sensible. Graduated against income, this would rapidly begin to replenish the Natural Disaster Fund presided over by the EQC and give reinsurers additional cause for optimism. Likewise, the Government could be more proactive in getting the rebuilding programme on track by perhaps identifying and commandeering new "quake-safe" land in Christchurch on which to re-establish entire suburbs. Such initiatives would also help calm the reinsurance nerves.
Longer term, the Government is keeping its cards close to its chest, while intimating it might be time to review the EQC. For the moment, it has its hands full.
Not that the earthquakes appear to have done its electoral prospects any harm. Perverse though it might seem, evidently for many people, the scale of the calamity that is Christchurch - a natural disaster - seems to dwarf the idea that man-made "policy" has a significant role to play in its, and the country's, fortunes.
