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

GCA Representative Action against Southern Response


Here is a little more information about the representative action against Southern Response.

Policyholders who have not yet signed up can still benefit from doing so. For those of you unsure about the benefits of the action or wanting to talk to the GCA team about your personal circumstances before making your final decision, please contact Grant Cameron’s team at the address below for an open and frank discussion (which won’t cost you anything).

As the ‘front man’ for the representative action, Cam Preston has agreed to act as the representative/spokesperson for the group. The Defendant in this action is Southern Response. Southern Response replaced AMI after the Government bailed AMI out with a NZ$500 million support package, which was intended to give policyholders certainty and ‘ensure an orderly rebuild of Christchurch”. Southern Response valued its loss estimate at $1.8 billion when it was bailed out in April 2012. It has increased by a billion dollars since then, with the Government (taxpayer) promising more if needed.

So the Crown became AMI’s shareholder as a consequence of a Crown Support Deed. AMI was the second largest residential insurer with 485,000 policyholders and 1.2 million policies across the country. It had more than 85,000 policyholders with some 225,000 policies, equating to about 35 per cent of the residential insurance market in the City.  So the Crown took ownership of AMI and took control of its Board. It exits now as what they call a run-off insurer.

All claimants in the legal action hold what is called Premier House Cover with AMI – which provided replacement cover. Full replacement was defined in the policy as ‘replacement with a new item, or repairing an item to an ‘as new’ condition’.

So in the event that the house was damaged beyond economic repair the claimant could elect to be paid full replacement cost ‘as new’ (on same site or on another site) or be paid the cost of purchasing a new house or the market value of the home.

If the house was not damaged beyond economic repair then Southern Response was obliged to make a payment reflecting the costs of repairs to an ‘as new’ condition.
But it would appear that after the earthquakes, Southern Response sent a letter to the claimants purportedly identifying the nature of the coverage and essentially redefining the terms of the contract as well introducing a project management company (PMO) into the mix.

The proceedings allege that Southern Response misrepresented the terms of the Policy by asserting that they had:

  • the right to conduct the rebuild itself;
  • asserting that the cash payment contemplated was on a depreciated replacement cost calculation rather than the market value of the house;
  • sent letters stating that it had the right to conduct repairs through Arrow International;
  • and required that claimants sign a memo of understanding as a condition precedent to SR discharging its duties under the Policy;
  • they advised that builders for the rebuild were to be chosen by Arrow on Southern Response’s behalf. There could be an objection but all builders had to be chosen by Arrow;
  • the exact replication of the house was required;
  • they tried to control the design of the rebuilt house;
  • and there were ‘self-managed’ build restrictions;
  • understatement of costs in the Detailed Repair/Rebuild Analysis and an under estimation of the work required;
  • the erroneous assessment of whether the house is beyond economic repair;
  • poor assessment of costs including demolition costs, design fees and project management fees;
  • insufficient assessments of the work required to reinstate foundations so as to meet the policy standard, avoiding apply for a building consent and employing repair techniques such as ‘jacking and packing’ piled foundations, relevelling slabs on TC2 and TC3 land using mechanical jacking and low mobility grout injection and lifting techniques, failing to take into account the flood proneness and the subsidence of foundations as a consequence of the earthquakes and failing to raise the height of the land to comply with new flood prone requirements;
  • Breach of contract in that Southern Response has failed to meet its substantive promises;
  • Breach of process rights and duties of good faith.

The claim asserts that the members of the representative group have not had their claim satisfied, there has been a systemic under-estimate of payment to be made, assessments were undertaken by people with insufficient qualifications, there were continual changes in the stance taken by Southern Response on the claims, the time delays have been unjustifiable and likely to have been intentional in order to reduce its liabilities knowing full well that this was likely to cause distress to an increasingly vulnerable group of claimants.

General damages have been requested for each claimant.

CGA Lawyers have requested that the Court allow another three months for the filing of other claimants who may want to opt in to the representative action. A Judge will be assigned to manage the proceedings and mechanisms will be put in place for resolving issues between the parties, including expert conferral and mediation of judicial settlement conferences.

The claimants have entered a litigation funding agreement with Litigation Lending Services (NZ) Ltd.

The factual issues pertaining to each case will be resolved through the case management of proceedings, particularly after the common issues arising from the claim are clarified.

If you are a claimant in a similar position with Southern Response, then you still have the opportunity to participate in proceedings. GCA Lawyers have requested that the High Court  meet the litigants’ opt-in order, giving other policy holders a further three months to join the action. Parties to the representative action join on a “no win, no fee” basis. With one win under their belts already (Quake Outcasts) wouldn’t you seriously think about joining GCA’s action.  Better to be supported by a team than attempt to ‘go it alone’ in court or cash-settle for a fraction of the true compensation due to you.

If you’re interested contact: Kerry Wright  or Laura Stone on (03) 365 1347.

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'.

2 thoughts on “GCA Representative Action against Southern Response

  1. Regarding Nikki Kettle: why is nobody mentioning that she is NOT a qualified Builder..? Recently, she attempted to have an ‘authority’ sign her as such – despite her rude and pushy manner, they refused. Just saying…


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