The Problems Cantabrians Are Facing with Insurance

By Sarah Miles via ChristchurchFiasco Blog

Owning a home and feeling secure in it is a cornerstone of our sense of financial security and personal confidence. This aspect of life was lost to thousands of New Zealanders in the earthquakes and now that loss is being compounded massively by the widespread difficulties in resolving claims. Shame on the Earthquake Commission, the private insurance industry and this Government for not coming to the aid of its citizens.

The list of ‘failures to deliver’ is a long one:

• Access to justice and the cost of justice;
• Lack of government intervention and the apparent government indifference to the plight of Cantabrians;
• Lack of transparency by agencies involved with recovery – Council, EQC, Government, CERA and the private insurance industry;
• Insurers lack of willingness to progress claims contributing to slow progress of recovery;
• Unrealistic and blatantly dishonest assessments of earthquake damage and scoping of work;
• Changes to assessment standards and the use of Department of Building and Housing Minimum guidelines to diminish settlements with homeowners;
• Requirement to continue to pay insurance premiums on uninhabitable homes;
• No legislated time frame for resolution of claims;
• Absolutely no policyholder protection- either in the form of cheap justice or an independent ombudsman;
• Legal class actions appear deliberately difficult to establish;
• Huge power imbalance between the parties;
• Questionable performance and vested interests of other professionals involved in assessments e.g. engineers and loss adjustors and lawyers acting for insurers;
• Apportionment issues between EQC and private insurers;
• Lack of good faith in dealings with people – (in fact, lots and lots of evidence of bad faith);
• Insurance dealings with clients heavily slanted and blatant distrust toward claimants is usually exhibited – which creates a vicious circle and adversarial atmosphere of distrust contributing to the stalling of the process;
• Lack of access to accurate information about progress in the City and the number of claims that have been progressed by insurers;
• Reducing policyholder claims/ low offers/ waiting for people to give up/ reducing payments for depreciation/ failing to properly investigate claims/ unreasonable interpretation of policy terms/ surprise ‘conditions’ introduced.

**Outcomes residents need now:

• Fair and transparent resolution of claims so that people can restore their lives. This entails assistance from the Government in the form of a Mediation Service such as the one proposed inhttp://thechristchurchfiasco.wordpress.com/2012/10/31/are-you-a-christchurch-resident-needing-help-to-settle-your-private-property-insurance-claim/  so residents can effectively and quickly resolve their outstanding claims in a timely and equitable manner;
• Maintenance of public confidence amongst decision making bodies rather than the political turf wars and overlapping efforts we witness;
• A Judicial Review of the red-zone decisions;
• Public access to all geotechnical information;
• Lack of affordable accommodation for those waiting settlement of their claim and access to affordable building sites for those wanting to rebuild;
• Access to personal information held by EQC and private insurers without having to go through the Official Information Act – we need these organizations to stop acting like the secret police!;
• A proper triage system implemented so the most vulnerable in our society can be helped first and can move on with their lives; At the moment ‘Campbell Live’ seems to be performing this function…….;
• An investigation into the continual changes in the standards to the building code which mean that the insurer benefits, the homeowner looses out and the City is left with thousands of sub-standard ‘repaired’ buildings;
• Some honesty and true oversight from the Institution of Professional Engineers NZ, who appear to accept this rubbish without a murmur;
• A Commission of Inquiry into the insurance practices throughout the post earthquake events (Seehttp://thechristchurchfiasco.wordpress.com/2013/01/13/call-for-commission-of-inquiry/);
• The introduction of exemplary/punitive damages in our courts for poor performance by insurers;  Only NZ does not do this in the OECD  – Why??;
• Legislated fixed time frame for the settlement of claims so that insurers cannot leave people in limbo;
• Honest answers to identifiable questions such as ‘how many people have left Canterbury’; and how many sections are there available to build on;
• The Government – Gerry Brownlee, that is,  needs to sort out the private insurance industry – remind them that if they are not up to the job there are plenty of other insurers around the world who would be happy to fill their shoes;
• Every insurer should have to provide the following on a quarterly basis:

Total Number of Claims

1.    Number of Claims Closed with Payment

2.    Number of Claims Closed without Payment

3.    Average time in days from date of claim report to date of inspection

4.    Average time in days from date of inspection to date of estimate

5.    Average time in days from date of estimate to date of claim payment

6.    Total number of adjusters working in field on losses related to Christchurch Earthquakes

7.    Number of Complaints

8.     Number of complaints as percentage of number of claims

Outcomes that New Zealand needs Going Forward:

• It’s time for us to begin to talk seriously about the introduction of a new insurance system  – a public insurer – KiwiSure,  where the people of New Zealand look after their own interests and the private insurance industry covers only contents, health and auto insurance.   Residential and commercial property would become the preserve of a public insurer.
• See Chapter 7 of The Christchurch Fiasco: the Insurance Aftershock and its Impact on New Zealand and Beyond.

Done properly (not like EQC) this could work brilliantly for the people;

• A major restructuring of EQC so that it provides the protection New Zealand citizens require;
• Policyholder protection in the form of a permanent mediation system and an independent insurance commissioner;
• Public access to a country wide database which details all information relating to geotechnical information so Cantabrians can make wiser choices about where to live and build;
• Affordable access to the Courts – justice for all, not simply the wealthy;
• Introduction of exemplary/punitive damages for insurers;
• Legislated protection in the Building Act which prohibits the watering down of consumer rights during post disaster rebuilds for the financial advantage of corporates and EQC;
• While private insurance industry is operating there must be sound prudential management of the insurance industry: changes to the way in which insurance companies are regulated so that capital adequacy requirements are more stringent so as to avoid failure of insurers during catastrophes;
• The introduction of the American concept of ‘bad faith’ on the part of the insurer as an actionable breach of contract;
• Speedy passing of the Class Action Bill which has been in limbo since 2009;
• Public education programs about insurance, its implications and what is required to protect yourself adequately – e.g. education about fixed sum insurance (in the event our nation is stupid enough to retain private insurance);
• Debate and Referendum on how we will insure ourselves in the future in New Zealand – public vs private.  The issue is too big to ignore.

We are  a seismic nation and we need to better prepare ourselves for the future! Cantabrians want answers! If the rest of New Zealand had any sense they’d also  be calling for these answers – because if they don’t – you can guarantee that it will be their Fiasco next time round.

We wouldn’t wish that on anybody……….These are issues any new Mayor of Christchurch will have to tackle head-on.