Category Archives: Insurance council of New Zealand

ICNZ

Official responses to John Patterson’s letter

Response to Open Letter from John Patterson, Older Generations Forum 10-11-14Response to Open Letter from John Patterson, Older Generations Forum 10-11-14  2

Mayor Lianne Dalziel – My response to John Patterson’s open letter
November 12, 2014 at 5:20pm

As Mayor of Christchurch, I’d like to publicly acknowledge this letter and the range of complicated issues it raises.

Christchurch City Council is concerned with the plight of our elderly citizens still struggling with their earthquake repairs or rebuilds, and elected members are in regular contact with Mr Patterson.

Councillors also remain in contact with the various authorities involved in insurance and the rebuild regarding the issues identified by Mr Patterson.

I met with the heads of insurance companies last week for a progress update, and will discuss the content of Mr Patterson’s letter with Earthquake Commission chief executive Ian Simpson at a meeting next week.

A recent report from the Canterbury Earthquake Recovery Authority (CERA) confirms that many of the remaining 38,000 EQC and insurance claims are likely to be difficult to settle.  Claims still to be resolved or settled involve complex issues; shared ownership of property, and complex land and building repair and rebuild issues.

But they also involve some of our most vulnerable residents, like the residents Mr Patterson writes on behalf of, who are experiencing a more challenging recovery.

I am pleased then to note that CERA and the Ministry of Social Development are investigating a more client-focused model of service to support the most vulnerable owners in decision-making, relocation and temporary accommodation.

This targeted assistance would include working alongside social and health agencies, and insurers to provide additional support for vulnerable owners. You can find CERA’s full report here: http://cera.govt.nz/sites/default/files/common/cera-briefing-for-the-incoming-minister-october-2014.pdf

Another issue raised by the Mr Patterson is a lack of co-ordination in city-wide planning.

A project by the Land Information New Zealand has made progress in this area over the past year. The ‘Forward Works Viewer’ is an online tool helping public and private find opportunities for coordination in the rebuild. The project aims to mitigate network impacts and project clashes before they happen. You can find information on this project in the Canterbury Development Corporation Spring 2014 report here http://www.cdc.org.nz/documents/2014/10/canterbury-report-spring-2014.pdf

I welcome your feedback on how elected members can assist our struggling elderly citizens in practical ways; please contact me via my official Facebook page.

 

Lianne Dalziel

Fair Insurance Code review update

Earlier this year, the Insurance Council of New Zealand (ICNZ) called for submissions on the Fair Insurance Code review. CanCERN submitted a particularly robust submission which can be read here and also spent time discussing the importance of the Code with ICNZ chief executive Tim Grafton.

What is it?

“The Insurance Council of New Zealand is responsible for the development of the Fair Insurance Code and its content. The Code is founded on the principle of self-regulation. The Insurance Council is required to review the Code every three years and one is now due. The Code covers all general insurance products with the exception of marine insurance1, but it does not cover either Life or Health insurance products.” – ICNZ

We understand the outcome of the review will take longer than was expected due to the challenges put forward by CanCERN and other submitters. Whilst some may see this as another delay, we are pleased that ICNZ is taking the time to ensure any changes to the Code truly reflect the learnings that come from the Canterbury insurance recovery and the wider insurance industry.

We recently received the following process update:

Dear Submitters,

In May we wrote to everyone who submitted on the Fair Insurance Code review to note that the ICNZ Board had appointed a sub-committee of its members to continue the review of the Code, and that the peer reviewer – David Caygill, who has had access to all submissions and drafts of the report – would continue to be involved in the review process.

The sub-committee reported to the Board earlier this month and the recommended changes were run past Mr Caygill. The ICNZ Board is now seeking feedback from its full membership, and this will be reported back to the ICNZ Board before the end of the year. As noted earlier, if significant changes are made to the Code, there will have to be a lead-in time to enable insurers to adjust systems and processes to implement a new Code.

Will a legal dispute hold up my repair/rebuild?

A question came to us this week asking why a contractor would stop work on the insurer’s advice if the homeowner started legal proceedings. We put the question out there and Samson from ICNZ has given us the following responses. We are awaiting a response from EQC.

We suggest if you have raw sewerage issues and your insurer or PMO is refusing to do the work, get the manager on the phone and ask what their decision was based on and what alternatives there may be to deal with the issue.

Are there legal or policy constraints on an insurance company that prevent them from being able to do any works or is it an in-house decision not to do so?

If there is legal action taking place, it can preclude an insurer from doing further works – particularly if these works are the subject of the dispute. However there are other ways that an insurer can meet its minimum obligation, such as paying indemnity value or cost of repairs to the customer even if they are disputed, but this will vary from insurer to insurer.

Does this also apply to works including lifeline work – power, sanitation, water? If people have raw sewerage issues is an insurer obligated to address the issue regardless of the claim being disputed through court action?

It could apply to those works (if that was the in-house decision of that insurer).  An insurer is not obligated to carry out temporary emergency works, but may choose to do so.  In some cases, an insurer may be willing to carrying out emergency repairs for customers that are in dispute.  If the insurer can’t carry out the work, it is may be due to the customer not wanting the proposed repair (i.e. the insurer intends to carry out a permanent repair, rather than temporary repair – customer doesn’t want this as they believe the house is a rebuild).

Do all insurers stop work or is it an insurer-by-insurer decision?

This is a matter that is considered on an insurer by insurer basis.

Insurers – flood related clauses

Once again, we have received examples from residents where their renewed insurance policies have additional flood clauses which are causing confusion and concern. We pushed these on to ICNZ and requested they ask all insurers to provide an explanation of any additional or altered flood clauses. ICNZ’s response is below.

“Insurers advise that there has been no change in their current approach to underwriting flood cover Christchurch, they continue to insure all existing risks, including where insurers are undertaking repair work.  While a few customers may have higher excess levels within identified Flood Zones, insurers continue to provide existing Christchurch customers cover.

Two cases were this week highlighted to the Insurance Council where flood exclusion was applied but upon further discussion with the insurer it was identified as a mistake and rectified.  The two customers now continue to enjoy flood cover for their properties.  The insurer has a formal escalation process in place for Christchurch Home and Contents policies to ensure a more consistent approach is enforced, and that any potential individual flood risks are looked at by their Risk Review committee.

However, insurers continue to monitor the situation closely and to take a case by case approach to ongoing flood cover and new risks.”

The issue of future insurability and how decisions will be made is a complex one and CanCERN believes it is important for all agencies to be aware of what may be communicated to homeowners. For this reason CanCERN is also intending to facilitate a meeting between councils, EQC and ICNZ to ensure everyone is best informed of what is happening in this space.

 

 

Insurance stats – June 2014

The CERA survey quarterly report is through and it is good to see there is greater detail about where people are sitting in the queue.

ICNZ is still holding firm to a finish date for most claims by the end of 2016. We are interested to hear where IAG sit within this time-frame as they have always expected to be finished by the end of 2015.  With the complications thrown up around land settlements, retaining walls and multi-unit buildings surely they will have to review that target.

There is no doubt that people have waited for what seems an eternity to get homes fixed and many will have to wait longer still but the figures are tracking well and according to plan and by the next quarter we will have officially passed the 50% mark. Let’s hope we make make quick progress from there.

You can read the ICNZ media release here.

icnz stats aug14

Insurance Council video interview

Some of you might be interested in a recent interview the Insurance Council’s CEO, Tim Grafton, did with CTV.

What’s talk about:

  • Declaratory judgement (0:00)
  • Insurability of IFV land (0:37)
  • Dodgy repairs – insurer liability (2:20)
  • Business interruption insurance (6:15)
  • Time frame for settling claims (7:53)
  • Are you satisfied with the job insurers have done? (8:30)
  • Key post-quake learnings for insurance industry (9:48)
  • Biggest insurance issues going forward (10:44)

 

Land damage and insurance policies

We always knew insurance policies would be rewritten after the Canterbury quakes and thankfully some people have learned a valuable lesson and actually read the small print before they consider signing.

One such fabulous resident has read her new policy and raised some very important questions about how much dwelling cover a person would actually have if they have identified land damage. Although the following wording relates to a VERO policy, other insurers may have similar wording so we have put these questions to the entire industry through Insurance Council NZ.

We are not entirely convinced that the implications of policy statements such as VERO’s below have been considered in light of the lack of answers to some of the land settlement questions. However, we believe it is fraught with difficulties to have such vague statements in a policy contract. Surely the insurance industry must also have learned that lesson.

The VERO policy says:

15. Unrepaired Land
This policy does not provide cover for loss caused or contributed to by land where you are aware that the land requires repair or poses a threat to the home. This policy will not cover loss caused or contributed to by the condition of the land where you, or a previous owner of the home, has received payment from the Earthquake Commission in order to effect repairs to the land, and those repairs have not been undertaken.

We believe that part of the problem with this kind of statement is the lack of definition. As it stands, the policy holder would have to trust the insurer’s interpretation of the statement and that is probably the other great lesson learned from the quakes – don’t assume you have the same interpretation.

The questions have been asked and we hope to facilitate greater clarity between the policy writers and EQC to ensure the statement is applied fairly.

  1. At what level of damage would it be deemed that land needed repair or posed a threat and who would tell the homeowner? What is the benchmark based on?
  2. Who makes the decision about what constitutes an appropriate and completed land repair?
  3. Will the insurer make any potential lack of cover more visible by asking specific questions and enabling the homeowner to make full disclosure of current situation at the time of taking up the policy?
  4. In the situation where a property is identified as Increased Liquefaction Vulnerability (ILV), a cash settlement is made but remediation is deemed not suitable (site issues, etc), how will the dwelling and out of scope cover be affected?
  5. What ‘remediation’ is expected regarding Increased Flood Vulnerability (IFV)?
  6. How will the cover be affected if you are one of those homeowners that repeatedly floods but will receive no cash settlement (not IFV)?
  7. Some people may not be told by the seller of a home if they had received a cash settlement from EQC for land remediation or the house could be on-sold multiple times before another event. How would the new homeowner in this circumstance be expected to know if they are therefore responsible to carry out land remediation at their own expense (no Deed of Assignment – DOA)? All documentation will be owned by the current owner unless it automatically goes onto the LIM and EQC cannot disclose that information to anyone other than the customer with the claim.
  8. ​Can we presume from the above statement that under this policy:
    a) cover will be provided for those whose payments have been made based on loss of value because settlement is not designated as payment for repair, or
    b) cover will not be provided if potential risk to the home is not mitigated against by lifting the property out of the flood zone regardless of foundation damage, and
    c) damage to a house on land identified as ILV but not repaired ​would not be covered?​
  9.  If EQC do settle ILV but the homeowner has already had bespoke foundations put in place so theoretically does not then need to remediate the land will they be covered for damage to the home?
  10. Are homeowners expected by insurers to repair damage to land that is not directly under the footprint of the home if it does not pose a direct risk to the house platform? What about garages and out of scope cover (paths, etc)?

ICNZ media release – progress update

CERA has released the new residential progress figures which show a fair amount of activity. It is worth noting that private insurers are still receiving a lot of newly over-cap customers from EQC which we believe will put pressure on the insurer target end dates. Whether or not this will impact decisions made by insurers as to how they will settle is as yet unexplored so we will be asking a few questions about this.

It’s also worth asking the question about the ‘missing’ claims from the last quarterly update. Where are they within these figures because we sure hope they have been found.

Excerpts from the media release – ‘Almost 60 Percent of Canterbury Earthquake Insurance Dwelling Claims Settled’ are below:

Figures from the Canterbury Earthquake’s Recovery Authority’s (CERA) latest quarterly survey confirm insurers had settled 51,799 of 87,705 over cap and out of scope dwelling claims at 31 March 2014.

The survey shows that 41,924 (64%) out of scope dwelling claims have been settled and 9,875 (44%) over cap claims finalised.

“Combined that’s 59% of all earthquake-related insurance dwelling claims completed which demonstrates real drive by private insurers and claims management companies to resolve earthquake-related claims in Canterbury,” says ICNZ Chief Executive Tim Grafton.

The CERA survey shows that insurers had 22,455 over cap dwelling claims at the end of March 2014, indicating that a further 493 had become over cap during the first quarter of this year.  The previous quarter had 21,962 over cap dwellings.

Of the 22,455 over cap dwellings, 9,875 (44%) had been settled, 9,755 (43%) were pending settlement and 2,876 (13%) were still to be made an offer or the insured had not made a decision on their offer.

Insurers and the claims management companies had completed 1,681 major repairs and rebuilds and cash settled 8,194 claims by the end of March.

“Our members are still forecasting that the majority of the insurer-managed rebuild programme will be completed by the end of 2016, however there are a number of factors outside the control of insurers that could impact on this such as land repair, retaining walls, Port Hills Mass Movement Areas, multi units and customers decision delays,” says Mr Grafton.

The original media release can be sourced here.

Rebuild Programme Progress Presentation

Yesterday CanCERN and Insurance Council New Zealand facilitated a session for a small group of community leaders to look in more detail at the Canterbury Insurance Rebuild Programme progress.

It was an interesting session and a good opportunity to ask some pertinent questions about the figures that have been collated by CERA. CERA releases the collated information quarterly. CERA is seen as an independent body which can report progress with some consistency.

One of the big outstanding questions is just how many claims are missing from the figures.  This report indicates 2600 but EQC Chief Executive Ian Simpson believes there are only 250.  Surely we could expect that by the next quarterly report CERA has identified exactly how many there are, who they will belong to and why in fact they have been unaccounted for.  Here’s hoping they are not our vulnerable people.

You can see by the presentation why some residents feel that insurers are on another planet. In terms of starting timeframes, we might as well be. Obviously the damaged or broken house began for people in September 2010 or February 2011. However, the insurer rebuild programme did not in fact start until halfway through 2012 so that is when they start tracking rebuild progress.

I don’t believe we will ever reconcile the two perspectives of just how long the repair and rebuilds have taken – the contexts are too different. I’m not even sure that particularly matters. What matters is how much longer it is going to take and the confidence and certainty people can get there is a plan in place to get them reinstated as quickly as possible.

The slide about media misinformation is an interesting one as the role of the media is a common topic amongst many of the forums I attend. Media don’t need to paint a ‘rose tinted’ picture of the rebuild but they do need to be accountable for reporting factual information. Misinformation causes people to have additional stress and sleepless nights and there is not a single person in Canterbury that needs that.

Thanks to ICNZ for presenting and responding to the questions and comments of community leaders.

The notes below relate to each of the ICNZ presentation slides. The pdf presentation can be viewed here.

Amounts paid slide
• End of Feb closer to 80% of commercial settled

Claims numbers slide
• 21, 962 relates to dwelling claims
• 2,680 undetermined whether under or over cap – waiting to be assigned to EQC or insurer
• Previous quarterly report showed 300.
• Insurers need to get on top of where those 2600 are and will they come to insurers

Total claims slide
• Claims settled means cash settled, rebuilt or purchased new home or repaired
• Pending or underway means the resolution has been agreed to but not yet reinstated or settled
• 3084 (14%) not finalised – either no decision made or no settlement yet offered or disputed

Recovery timeline slide
• Starting point for insurers second half of 2012 for the start of rebuild programme. The figures collated now show those jobs started during this period

Overcap dwelling claims slide
• 3084 – think many are waiting for land claim information, others are disputing and others have various reasons for not being able to accept a settlement yet
• How can insurers help get those people to be in a position to settle?

In resolution slide
• Consent tracking helps to drill into granular level of understanding what is coming through the pipeline

Completing ‘in resolution’ slide
• Timelines are subject to all sorts of variables – not all in insurer control
• Builders reported they built 6000 homes last year and insurer only account for 1500 of those
• This year builders think they can build 7000 homes, a large portion of which will be insurers
• What about the 2600 insurers didn’t know about?
• What about the 3000 undecided who are not yet scheduled into the projected timelines?
• There is the potential that rebuild programmes could get pushed out by a year based on unscheduled figures
• If the build resource is still available …

ICNZ Facilitation role slide
• Insurers and ICNZ are frustrated about roadblocks too
• Weekly meetings with CEOs to see what needs to be done, what is inhibiting progress
• GMs meetings – monthly or as required
• Steering groups are to try to understand the complexity so insurers can plan and address issues – collaborative information sharing
• High level communications steering group established to insure all agencies get a heads up about upcoming information releases so that all agencies can be prepared to respond to customers with good information

Q – What constitutes contaminated land?
A – HAIL register – Environment Canterbury holds it and it records activity that means soil testing has to occur

Q – Where can we get individual insurer rebuild figures?
A – Most insurers report on their own website. The CERA released figures are based on aggregated data collated by insurer so they don’t tell the individual story. The aggregated figures don’t really demonstrate what the individuals are doing because of the different market share and the different ways insurers settle (predominantly cash settling or not). For example, IAG and SR have about 31-32% of residential rebuild market, VERO has 18%, Lumley and Tower have 8% and MAS have 2-3%.

Q – Why can’t insurers just take the 2600 claims and deal with EQC later?
A – EQC has to hand it over to insurers first.

Q – Will insurers do a joint review if they disagree with EQC?
A – EQC has to agree to a joint review.

Q – How did CERA get the figure of 2638 undecided?
A – It is the gap between insurer reported numbers and EQC reported numbers.