thechristchurchfiasco

"The Private Property Insurance Industry Expose"

Mainzeal and Project Management Agreements

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I for one am very pleased that my husband and I insisted we would not sign a Project Management Agreement with our insurer. For those of you who are out-of-towners, a project management agreement is the document the large insurers were ‘requiring’ their customers to sign prior to work commencing on earthquake repairs. (For many of us – that work has still yet to be carried out). In our case this agreement was to have been with the contractor Hawkins Construction, as I am a State Insurance customer and Hawkins is their preferred contractor.

The brochure from State said “…to help you repair and rebuild. State is working together with the project management experts from Hawkins to manage the reinstatement of your property as quickly as possible”. State went on to offer that “we’re ready to start the journey with you and the project team has already consulted with the local councils, suppliers, building companies and trades-people in preparation for undertaking your reconstruction works efficiently and effectively.” “We know you are busy and other key decisions, you may simply want the project team to take over and just get it done”….”you get to sit back and let the Hawkins project team do the hard work for you”.

The day our Hawkins contractor arrived he showed up with a packet of biscuits. When I made reference to the biscuits he said it was a ‘customer relations exercise’ and that it was company policy- a nice touch perhaps. Well a quick read of the project management agreement left me in no doubt that it was a deadly touch and that we would not be signing the agreement. In effect, the agreement required that we were to have a rebuild agreement only between us and Hawkins and whomever they subcontracted. State Insurance was thereby conveniently left out of the picture. I don’t know about the rest of you- but my home policy says nothing about ‘3rd party contractors’. I never signed up to have a third party fix my damage – my contractual relationship is with the insurance company and the insurance company only. I don’t have to sign a Project Management Agreement, and certainly not one that does not have my interests at heart. Anyway, after considerable wrangling with the insurer and thousands of dollars in legal fees- IAG (State’s parent company) finally conceded that indeed we did not have to sign their agreement and eventually sent a letter to the rest of their customers stating that this was no longer a requirement together with their ‘apologies’. No doubt it has been superseded by another watered down version of the first letter.

This approach is likely to be no different for the other insurers ‘project management partners’ either. This is simply another way the insurance industry is slowing down the recovery process and adding to the Christchurch Fiasco. My point is – that had I signed the agreement, allowed them to begin the work and if, like Mainzeal, they’d gone bust, where would that have left us- the vulnerable homeowners?? Up the creek without a paddle- that’s where. The insistence on the part of insurers to use preferred contractors is in my opinion questionable. Progress in Christchurch would have been far more advanced two and a half years down the track if people had simply sorted out their own building repairs. In addition, local contractors would have fared far better. Those doing shoddy work would simply have gone out of business.

Instead we have several large outfits, making huge profits, slowing the recovery down and often performing less than averagely. Let’s face it, complaints abound in relation to work carried out by these large monopolies such as Fletchers (see http://www.facebook.com/FletchersEQChassles). Instead of sitting around waiting for these large contracting monopolies, many Christchurch citizens would and could simply get on with their lives. Have you looked at who are their principal shareholders………?

Mainzeal was Vero’s (and AA Insurance plus SIS Insurance) preferred contractor, though in a statement Vero said that it uses Mainzeal as a “major partner in the commercial reconstruction of Christchurch” and that it had “not been using Mainzeal for any domestic projects” and that “this will not affect the overall recovery in Christchurch”. (See http://m.nbr.co.nz/article/leaky-buildings-chinese-supply-botch-fell-mainzeal-over-just-20m-bd-135457). The CERA Recovery Authority’s Roger Sutton says there was no indication that Mainzeal was having financial problems when it was chosen. Yeah right! The directors of the company have themselves stated that they knew the firm was in difficulty. Really thorough due diligence. Let’s watch who buys the remains of Mainzeal and for how much, eh? Should be very interesting. It is possible that these events will not affect homeowners but I am hearing many stories of customers being told that they will have to wait until 2015 or 2016 before they will see any work begun on their properties- that’s five and six years after the original event! (See http://www.stuff.co.nz/the-press/news/christchurch-earthquake-2011/7545476/Why-the-long-wait-Veros-customers-ask). And customers are going to put up with this?? I do not believe that there is anything in my insurance contract that states I have to use the insurer’s preferred contractors- why should I- this is not what I signed up for, nor is this what I want. It would be appear to be another example of the dear old corporations looking after each other. I think it’s about time New Zealand dumped ‘Corporate Government’. This year!

Resources

http://www.insolvencywatch.co.nz/mainzeal-director-silent-on-firms-failure/

http://www.radionz.co.nz/news/national/127444/mainzeal-receiver-has-had-offers-to-buy-company

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10864101

http://www.stuff.co.nz/business/industries/8286607/Outlook-positive-despite-Mainzeal-collapse

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Author: Sarah Miles

Trained as a lawyer and psychotherapist.

2 thoughts on “Mainzeal and Project Management Agreements

  1. I have it in writing from VERO that Mainzeal would be project managing our domestic rebuild…
    They threatened that if we didn’t accept Mainzeal they would cancel our insurance
    We chose to manage our own rebuild…VERO did try all the way through the process to get us to sign agreements that would see them paying less ..ie they tried to get us to pay for demolition (part of the IC responsibilities)….they tried many times and would then try to wangle themselves out of paying for something else…
    All I can say…don’t believe any insurance adverts that say how great they are…how fair they are
    They are a business…they will try and reduce their payout to you any way they can

    • Yes they are a business and are answerable to their shareholders and stakeholders in their life assurance type policies so perhaps Vero should be reminded of this and told a perception that the business is being run in an unethical way resulting in lost business should result in those responsible for the policy decisions being re assigned to the dole – permanently.

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