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

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Seismics and The City Conference Christchurch

Keynote Speech Session: “Clearing the Decks”

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My Insurance Nightmare with State Insurance ….

Since I published The Christchurch Fiasco: the Insurance Aftershock and its Implications for New Zealand and Beyond, many people have asked me about my personal insurance story, as this is not covered in the book. So in response, I am pleased to provide a brief break down of the facts:

My insurer is State Insurance, which is an Insurance Australia Group (IAG) subsidiary. My home was seriously damaged in the September 4, 2010 earthquake, so badly damaged that Civil Defence considered the house uninhabitable. We have not lived there since that earthquake and instead have been ‘camping’ with family and friends at cost. That was almost five years ago. In that Bannertime we have had the following experiences with State Insurance:

  • Delay of our claim by repeated use of external parties such as loss adjustors, lawyers, structural engineers and quantity surveyors and the many insubstantial reports/visits associated with each of these groups;
  • We have had over 31 separate visits to the property involving more than 70 people- and those are State personnel;
  • Statements that the house was to be a ‘repair job’ even prior to the release of any engineering reports and contrary to EQC assessment that the house is a rebuild;
  • Repeated denial of the extent and cost of the damage to the property;
  • Low-balling the claim settlement, time and time again. In the past four years State’s ‘assessment of repair cost’ has been repeatedly reassessed. In fact we have had six offers from State Insurance ranging from $198,000 to over $900,000 – an $800,000 increase!!!
  • Attempts to extract the payout of the Earthquake Natural Disaster Fund from our bank account without our prior consent. Our Bank phoned us to inform us that State Insurance had requested (in writing) the funds be transferred to them, and “did we know?”.  This occurred before any agreement of the route to be taken, actual work  being carried out or any offer of settlement.  They just wanted the money!;
  • State initially refused to meet with us despite repeated requests. It took four months before we finally made face-to-face contact and only because we employed the services of a law firm to secure a face-to-face meeting. State claim that their’s is a telephone claims service only;
  • State denied the fact that the property was uninhabitable despite its yellow sticker status (i.e. limited access and needing further evaluation). There is clear evidence of structural damage to foundations, chimneys, walls and roof;
  • State denied our accommodation needs for 18 months;
  • A 500 litre header tank came loose from its moorings during the earthquake and its entire contents spilled through the upstairs ceilings and rooms (bringing down ceilings) and onto the ground floor below soaking the entire area. State have denied our content claim as a result of the mould and water damage (also coming up through the concrete foundations) using ‘hidden gradual damage’ as their reasoning;
  • Repeated repair assessments carried out using the MBIE Guidelines and not our insurance policy standard despite it being clear that the policy standard is the standard to be adhered to;
  • Insistence upon the signing of a Project Management Agreement (PMA) between State’s preferred contractor (Hawkins Construction) and ourselves, which tried to limit  liability and which was in conflict with our legal rights under the insurance policy and ultimately our financial status – again lawyers were involved. Eventually (months later) State Insurance conceded that the terms were onerous and changed the PMA for all IAG Insurance policyholders;
  • Using the Court process as another way of delaying the claim e.g. delayed expert reporting;
  • Forcing us to incur additional expenses as we have had to employee the services of good quality, independent, engineering firms and quantity surveyors as well as a lawyer. This has highlighted huge discrepancies between the insurer’s ‘version’ and the true state of the property. Such a  need to ‘protect’ ourselves from our insurer flies in the face of ‘good faith’ dealings and the fiduciary obligations of an insurer;
  • Insistence that the NZD 20,000 Earthquake Commission Contents cap actually be spent on replacing items prior to State Insurance’s agreement to finally settle the initial contents claim. In addition, the use of “depreciation” to diminish the claim;
  • Insistence upon all communications between our legal representative and State Insurance having to go through State’s lawyers, – which naturally increased the costs for us and has delayed the settlement process even further;
  • Using ‘betterment’, ‘faulty design’ and ‘pre existing damage’ in an attempt to diminish the claim;
  • On two occasions we have been told that if we accept a particular offer ‘work can begin tomorrow’;
  • Unpleasant customer service.  In the early phase of the claim we were told by one of the claims managers “who did we think we were” and that we should be careful otherwise “we might find ourselves at the bottom of the list”. This was stated during a meeting with our legal representative present;
  • State’s (then) Chief Executive (now one of the EQC Commissioners) also stated that “you’ll have what we give you”;
  • Request to tape record meetings with State was denied;
  • Huge difficulty accessing our insurance file, despite the fact that we are legally entitled to it. Eventually we had to make a formal complaint and request through the Privacy Commissioner. The Commissioner conceded that some of the information State Insurance was withholding should have been released;
  • State’s ‘independent’ engineers assessing the property using the various iterations of the MBIE Guidelines despite being aware of the policy standard, resulting in the repair scope being continually diminished and still not to the policy standard.

It is for this reason that I believe New Zealand needs to find another way to protect its citizens and their property post natural disaster. In a capitalist society where profits are king this level of performance may be acceptable but in pursuit of a fair functioning democratic society this behaviour is unacceptable. A permanent government catastrophe insurance programme which is able to provide an adequate lower – cost public substitute for a notably larger, national client base will crowd out and eventually legislate out the private market alternative.

I have waited long enough – the only solution now, is the law…

~Future Proofing for a sustainable, participatory, democratic society.

If you would like to contribute a post on this topic then see Guest Archives.


Backstory to The Christchurch Fiasco…

…the Insurance Aftershock and its Implications for New Zealand and Beyond.

Courtesy of Micah Richardson, “Roots and Cracks”

Like most other people living in Christchurch, on September 4, 2010 I was to experience the incredible force of a 7.1 magnitude earthquake at close quarters.  I live not far from Kirwee which was the earthquake epicentre. As a result of that event my home was severely damaged.  Amongst other serious damage,  the 500 litre water tank in the ceiling broke loose, and the contents flowed through the entire upper floor and throughout the ceilings and floor below. The house was a broken, chaotic, saturated mess. On the morning of the earthquake, being organized types, and worried about our situation, my husband and I drove down to the State Insurance offices in Riccarton to see if they were open. To our surprise we found a note stuck to the front window which said “ring the Earthquake Commission”. Admittedly it was a Saturday, but under the circumstances one might have expected to find a staff member there.

So that’s what we did. We made the call to the Commission at about 9.30am. I could not believe it but we were the 2000th or so call that morning! After a brief conversation we were allocated official earthquake claim numbers and those numbers remain with us today- now into our third year since the event.

We spent a strange weekend wondering what to do next, where we would live etc. Then again on Monday morning we wandered back down to the State Insurance office wanting to talk about our circumstances with the ‘appropriate’ staff member. They ‘had no one we could talk to’ and for the next four months they fobbed us off from any meaningful contact or meeting. We made many visits to their offices over that period, wanting to arrange an assessor and discuss accommodation allowance and storage possibilities. At one point we had a conversation with the office manager expressing our concern at the lack of communication around our claim. Still no one would agree to meet with us to discuss the situation. It finally took a formal request from a law firm to arrange a meeting. Since the earthquake we have had what can only be described as an extended nightmare with our insurer. But that’s another story.

I did not start writing The Christchurch Fiasco until September of 2011. I remember the day well. I had gone along for a regular session with my Psychotherapy supervisor about my plans for the year. During that conversation we began to discuss our experiences and expressed our disbelief around the events transpiring in the city. By the end of that hour a subconscious process had begun to percolate and by the end of the day I knew what had to be done.

I feel that a great injustice is being perpetrated in this City and that the rest of New Zealand has very little idea of what is taking place here and the extent of the battles people are facing with their insurers, EQC, local and central government- and for many people their financial livelihoods are also at stake. This is not the result we pay our premiums for……….

I feel strongly that this city has a story that really requires telling, and in the absence of any thorough and balanced media coverage or analysis, I have taken it upon myself to undertake that task. This is not my personal story, it is the story of an affected population struggling with bad faith insurers and a government that is failing to assist in their plight.

As a culture, we New Zealanders place much emphasis on positivity and applauding our successes and yet I feel it is important to balance our successes with acknowledgement of our failures as this is the only way to facilitate change and ultimately improve the society in which we live. So do not imagine that the pages of my book are a negative indictment on what has transpired – rather they attempt to bring some transparency to the events in Christchurch and place these events in a global framework so that the Nation can understand the pattern which is unfolding and ensure that we address the issues that have arisen more effectively, and quickly so that we are better prepared next time round. And let’s face it – there will be a next time…. this is seismic New Zealand after-all!

I began writing The Christchurch Fiasco the day after that supervision session – much had already transpired despite the fact that we were only one year into the post disaster phase. Right from the outset I was torn between writing the book from a therapeutic standpoint or approaching it from a purely insurance industry/corporate-focused approach. I decided to go with the latter as I felt that ultimately corporatism and government are where the problems are generated and where fundamental changes need to occur.  My past professional background in the corporate world served to bring some clarity to the topic. At the heart of the book my focus was, and still is, the affected population of Christchurch, the need to change the national/corporate system which is not geared for good outcomes and the desire to inform the rest of New Zealand of their substantial vulnerability if we do not make changes to this system.  I have also proposed some changes for the policymakers to consider.

Over the past two years I have talked with many people and listened to their stories, dug under the news, become involved in internet earthquake support groups. I have participated in Community Workshops, meetings and protests.  I have listened to, and examined the ramblings of people from Government, CERA and the City Council plus the ubiquitous ‘corporate front people’. In the interim I worked away behind my computer, working quietly in the background writing and establishing my Blog and simultaneously continuing to try to resolve my own insurance nightmare.  To be sure, my own insurance process has provided me with a wealth of material all of its own.

Like many of you folk, more than two years down the track , my insurance claim is still not settled either.  The intention of this book is to empower New Zealanders to be part of the decision-making processes in order to create a better system and a sustainable society. We do have the power to change those things that work against us………….

~Future Proofing for a sustainable, participatory, democratic society.

If you would like to contribute a post on this topic then see Guest Archives.