"Highlighting the inadequacies of the way in which the earthquakes of 2010-2012 were handled by the insurance industry! "

Call for Commission of Inquiry


I spent yesterday browsing through the Queensland Floods Commission of Inquiry- I recommend you take a look! The link is
Obviously my interest is in insurance so I made that my focus while flicking through the Commission’s report. This is what I found.SAM_1716

The inquiry considered the following:

• the timeliness of insurers’ decision-making (see 12.5.1 Determination of liability)
• the adequacy of communication with policyholders (see 12.6 Communication with policyholders)
• the adequacy of the assessment process (see 12.7 Assessment process)
• the adequacy of information given to policyholders whose claims were denied (see section 12.8
Information to policy-holders whose claims were denied)
• the process and timeliness of internal dispute resolution (see 12.5.3 Timeliness of internal dispute
resolution and 12.9 Internal dispute resolution).

So what did they find?

One of the main criticisms directed at insurers in public discussion was that they took too long to decide claims and surprise, surprise, many policyholders expressed frustration and distress in complaints to the Commission, and also to the Natural Disaster Insurance Review, about the time taken to determine their claims.

But get this- in Australia insurers have an obligation to determine claims in a timely way. It is an aspect of their duty to act with utmost good faith. That sounds familiar, doesn’t it? However The General Insurance Code of Practice imposes a 10-day time limit on insurers to determine claims- 10 days! This time-frame must be met:

• from the date the claim is received if the insurer has all necessary information when the claim is lodged and no further assessment or investigation is required
• otherwise – where further information or investigation is required – from the time the insurer receives all necessary information and all investigations are completed.
Timeframes can be extended by agreement between the insurer and policyholder – though insurers are not required to adhere to the time limits set in the code when dealing with a large number of claims following a natural disaster. This point was further considered by the Commission.

As a result of the Queensland flooding, insurers received an exceptionally high volume of claims as a result of the 2010/2011 floods. The Insurance Council of Australia has reported that, as at 24 November 2011, 58,463 residential and commercial claims were made as a result of the 2010/2011 floods. Residential claims (excluding, it seems, contents claims) alone totalled 26,554. Those figures did not include all insurers, but the Insurance Council estimated that its statistics represented 96.8 per cent of all residential and commercial claims made as a result of the 2010/2011 floods and also Cyclone Yasi. Bear in mind that some of the same insurers are responsible for settling claims here in New Zealand post earthquakes- such as IAG (State and NZI) and Vero.

In a large number of cases insurers could not meet the 10-business day timeframe and delays occurred. The Natural Disaster Insurance Review reported that insurers took, on average, 28 days to accept claims related to the flood in Brisbane, four times more than the average time taken to accept claims which resulted from Cyclone Yasi. (Most Christchurch claimants would have been thrilled….)
One insurer which, on average, determines ‘business as usual claims’ in five business days, told the Commission that the average time it took to determine claims arising from the 2010/2011 floods was 35 business days. (Claims resulting from Cyclone Yasi were determined on average in 14 business days.)

Delays were more extensive in many other cases. The majority of claims which were the subject of a complaint to the Commission were determined in two to four months; the longest period of delay was nearly five months. Five months! These are the sorts of time frames that a reasonable person would expect. Two and a half years falls well outside the realms of reasonableness and it is likely that the New Zealand Courts will soon find this to be the case. Those of you with pending cases should take good note of the findings of this Commission.

Delays in the determination process undoubtedly caused distress to policyholders whose lives were significantly disrupted by the floods. The Commission therefore supported the introduction of a time limit in the Code of Practice for the determination of claims arising from a natural disaster. The Commission considered a maximum of four months to decide flood claims, though lengthy, is reasonable in extraordinary circumstances such as those that prevailed in the wake of the 2010/2011 floods. They acknowledged that four months is, however, a long time for policyholders to await decisions on their claims. They also stated that it goes without saying that insurers should decide flood claims in a shorter period of time wherever possible. As we would expect, insurers naturally argued that a number of difficulties added to delays in the determination process, including:

• the high volume of claims arising from the floods, as well as other natural disasters which occurred within the relevant period of time (discussed in 12.4.1 The number of claims)
• the complexity of some cases
• the difficulty of getting access to affected areas
• the limited availability of loss assessors and expert hydrologists
• the time taken to receive flood data and information from government agencies and councils.

After 6 months only 2% of claims were outstanding. Mind you, they managed to deny 27 per cent of all claims. The Natural Disaster Insurance Review recommended the introduction of a four-month time limit, subject to exceptional circumstances, for insurers’ determination of liability. On 10 October 2011, the Insurance Council Board agreed in principle to amend the code in line with the review’s recommendation. In November 2011, the Insurance Council reported that 85 per cent of residential claims from the 2010/2011 floods had been ‘closed’, meaning that goods had been replaced, repairs completed or cash settlements made and the insurer considered the claim ‘finalised’. The repair process was underway in the remaining 15 per cent of cases.

Well, you can imagine that I was left scratching my head after reading this. So exactly what is going on here in New Zealand – the same insurance companies are operating, but certainly not the same level of customer satisfaction or service. Could it be that they’re simply dragging the chain because they can. There is nothing in our New Zealand legislation appertaining to private insurers that states that they have an obligation to have anything sorted by ‘such and such’ a time frame nor is there apparently any desire on the part of our ‘corporate-hugging’ Government to ensure that they perform to better time-frames. Two years on and I know people who have not yet been seen by their insurer- let alone have an assessment made. Unbelievable!

It’s clear that we too need a Commission of Inquiry in New Zealand and there is no doubt that a specified time frame to perform contracts requires inclusion in the suite of obligations that private insurers must be made to adhere to. The time frames for private insurance performance in Christchurch are simply inexcusable on any grounds. I would like, very much to hear the New Zealand Government’s explanation/justification as to why we ‘leave it to the market’, whilst our Aussie neighbours take more care of their people. Well, Mr Brownlee, why would that be?

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Author: Sarah-Alice Miles

Love to write, create and watch the clouds move across the sky - these days in the Netherlands. 'Art allows us to find ourselves and lose ourselves at the same time'.

15 thoughts on “Call for Commission of Inquiry

  1. Being over seventy years of age, I can recall times when New Zealand was a fairer and more decent place where “good faith” meant just that, just as expressions such as “my word is my bond” meant something … people of all classes in society believed in them and in each other. They are the generation who had weathered there Depression and, when called upon and despite the awful experience of the First World War, left their farms and workshops and dealt with the Second World War in workmanlike manner then to return to their nation to carry on with a common purpose no longer to be found. Why do I think this ? Since the nations lurch to the right in the mid-eighties, in pursuing the neo-con chimera of wealth creation … for some … and the wilful and politically motivated destruction of a fine public service ethos and the undermining of ethical standards of business and of the professions we are now witnessing the consequences. Politicians, always distrusted are now seen to have bought by big business along with the judiciary and the legal profession. An unreasonable conclusion … not if you have a damaged property in Christchurch, and are not rich or influential, and have been endeavouring to deal with insurers who, in demanding utmost good faith dealings of its customers exhibit exactly the opposite in their dealings with ordinary individuals. Kiwi’s, you have brought on yourselves … by your trusting innocence and lack of fibre. Who of you has noticed the recent Transparency International measure that has seen New Zealand slipping back from its “most honest” standing. It may yet be a long way down but the slope is slippery and the brakes no longer working …


  2. Its like you read my mind! You seem to know so much about this,
    like you wrote the book in it or something. I think that
    you could do with a few pics to drive the message home a bit, but
    instead of that, this is wonderful blog. A great read.
    I will definitely be back.


  3. For Mr Kees “The Press” 29/11/12

    Property developer Antony Gough became the first landowner to settle with the Crown when he signed over his Poplar Apartments site on Madras St for about half its registered valuation.

    I hope this quote will prove there was nothing false about my previous post that you felt I was being offensive about.


  4. Sleazkey, I don’t see the need for exemplary damages. They are an irrelevance.
    The breaches of contract by insurers and statute (in the case of EQC) are blatant and actionable in and of themselves…why beat about the bush?
    Do I believe the NZ judiciary is independent?…well I do not know for sure, but consider this…if they are not, the constitutional legitimacy of the State to the sole and exclusive right to the use of force is invalidated.
    For that reason alone I hope the courts are still an effective check and balance upon the power of parliament.
    What is clear is that the legal fraternity in general (lawyers at least) are hugely compromised in Chch, in the way they have been co opted and and have largely shepherded clients in the redzone to accept the CERA ‘voluntary’ offers, which in the case of CERA option 2a clause 25.2 surrender homeowners EQC claim negotiation rights and land and grant the Crown ‘unfettered’ ability to settle EQC claims in anyway they see fit ‘without any duty of care’ to the homeowners. How can any decent lawyer with a conscience have advised a client to sign such a contract?
    Is it because the National government threatened in 2009 to outlaw the NZ law society and bring them under statutory control if they opposed the draconian new legal aid rules introduced that same year? I think the legal fraternity have ‘lost their balls’ and have failed their ‘duty of care’ to redzone clients and others as a result.
    Whether that corruption extends to the bench shall be revealed in the coming months.
    Lets hope not, or the infamous arguments put forward by the NRA and others would become frighteningly relevant to Godzone!


  5. I have been inspired by Sarah Miles , launching my own small Facebook site named Southern No Response . It’s unacceptable that so many people in Christchurch have waited so long and nothing has happened. I’m ready to fight for my home to be repaired however feel for the vulnerable people in our communities. If Sarah wants to launch a petition to lobby for a Commission of Inquiry then I will pound my local pavement & be down at the Mount Pleasant Farmers Market spreading the word ! It won’t be too hard to get signatures in this area.


  6. I have asked questions and complained to Gerry Brownlee’s office, EQC and am involved with my MP -Ruth Dyson’s office. Questions have not been answered EQC ignore, they have people behind desks making decisions who have never probably even been to Christchurch. The media need to pick this up and make all of them accountable for the poor handling of our biggest assets. Like all of us who have paid insurance for many years, this situation is unacceptable and needs to be investigated and sorted out and that should have already started. I like many others have endured this situation for far too long.


  7. What I dont understand is that some poeple have been quoted $30,000 to hire a lawyer which seems a real rip off to have someone analyse an insurance policy’s wording and even if you loose the case the lawyer walkes away with $30,000. As for compulsary acquisitions it does appear if you do not accept 50% of the pre earthquake value your property will be compulsary aquired based on news media reporting of CERA valuations.


    • I agree Peter. A Chch lawyer we consulted stated that pro bono was just not the done thing in NZ. I asked why…he had no answer except its just not the way we do things in NZ…ie trust us we know what we are doing, but if you lose we still get paid…I see this rather patronising and self serving attitute from the legal proffession as causing much of the current inequity we are facing.

      BTW the thinly veiled CERA Brownlee redzone threats to compulsorily acquire have yet to be tested…I believe this would constitute the government weilding undue influence and duress to accept what they have offered and overstep the intended powers of CERA.
      They have been careful not to definitively state they would compulsorily acquire or on what terms. it is all smoke and mirrors designed to preserve John Keys promised 2014 budget surplus at any cost…in this case the rights of redzoners.


    • That might be correct Peter but they would have to pay market rates which will be a lot more than the 2007 RV and it will have to be done under the works act so Brownlee can’t railroad us.


      • I think I read in the news media that some sales have already been made at 1/2 pre earthquake value so to pay others more
        than that would be unfair or it would involve having to top up the payments of those who got half. With about 800 properties to buy/acquire the process is likely to take many years. They may end up having to leave some businesses where they are if they make things difficult enough.


      • Peter unless you have a link to such reports I find your baiting of poor form so either put up
        or desist from making these kind of remarks your dealing with peoples lives here.


  8. Don’t give up! If you believe in your cause you can fight it. Garner the support and good on you! Wishing you all the best. THE SMALL GUY CAN WIN!

    Wishing you the best.

    Here’s my story:


  9. Unfortunately I doubt a government ordered inquiry will work.
    The government is intricately involved in this fiasco from EQC to the arbitary zoning of properties to the secret deals made behind closed doors with un named foreign reinsurers.
    The only way to possibly have these issues examined and decided upon by Independent and credible assessment is a court of law.
    Claimants could bring a class action against the government for ‘breach of statute’ and placing homeowners under ‘undue influence’ via zoning decisions, threats of compulsory acquisition, and more. Numerous pleads for arbitration to be organised by insurers or the government ignore the central part both insurers and gpvernemtn have played in this unprecendented betrayal of our property and insurance rights.
    People have been too reluctant to ask the hard and awkward questions and confront the root causes of this crisis. It is not alone the insurers or even the government who are to blame, it is us for being so slow to ask the hard questions and demand answers, and take legal action.
    Hopefully the several cases now heading to court will encourage others to take the hard road toward the truth.
    We in NZ have not before had to take such a litigious route on such a scale, it is a ‘loss of innocence’ and trust that is unfortuante, but it now seems almost inevitable.


    • I don’t disagree with you Steve, but do you really believe that the Judiciary is independent of political interference.,,,,,,,,? why do you think NZ still does not have the remedy of exemplary damages for corporates? – If you read the Appeal court ruling on this, it is pathetic. The reason was given ‘that it should not be possible for a plaintiff to threaten a defendant with exemplary damages’………. In fact, you don’t threaten, you simply ask the Court (in your written plea) to consider it. Isn’t it the job of the Courts to consider it, in any case???


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