Travel insurance advisory: Jet fuel shortage

Travellers caught up in the jet fuel shortage are advised to contact their airline or other travel provider they booked with first, and then their travel insurer if needed the Insurance Council advised today.

“If you face extra costs or lose out on something you pre-booked, your travel insurer may pay those extra costs or loss” said Insurance Council Chief Executive Tim Grafton.

“Travel providers may be able to rebook your arrangements without extra costs. If you do suffer extra costs, make sure you keep receipts. As always, check your policy wording and talk to your insurer to understand what costs your insurance policy covers you for” he said.

“We can’t stress enough that travellers need to purchase their travel insurance when they book and pay for their tickets and not just before they are about to travel if they want to enjoy the benefit of cancellation cover. Likewise, if you book a trip and buy insurance after events like a fuel shortage have been publicised, you will not have cover for those events” he said.

Majority of Kaikōura and Edgecumbe insurance settlements complete by year-end

Private insurers are confident that the majority of Kaikōura earthquake and Edgecumbe flood settlement offers will be complete by year-end the Insurance Council of New Zealand reported today.

Insurance Council of NZ Chief Executive Tim Grafton said “2017 has been a huge year for New Zealand with earthquakes, floods and fires hitting us hard.  Private insurers are committed to 90% of Edgecumbe insured residents being back in their homes by Christmas.”

“We said we would have the majority of Kaikōura earthquake settlement offers made by year end. We are over half way and ahead of expectations” he said.

Nationally, private insurers are 59% settled or partially settled for residential and commercial claims for the 14 November earthquake.

In terms of residential settlements, 53% had been fully or partially settled by end of August compared with 43% in July and 36% in June” he said.

The total value of insurance claims for the 14 November Kaikōura earthquake as at 31 August 2017 is over $2 billion with most of the losses in commercial claims at $1.48 billion, with residential claims amounting to nearly $0.55 billion.

Private insurers have completed 92% of all residential building assessments in the Upper South Island as insurers continue to focus on the most damaged areas.

“We are pleased with our steady rate of progress and continue to have a high level of confidence that the majority of people will have received settlement offers by the end of this year. Seventy seven percent of all residential buildings had been assessed by the end of August compared with 62% in July and 51% in June” he said.

Private insurers have received nearly 44,000 claims, of which nearly 32,000 are for residential properties. Insurers are acting as agents for the Earthquake Commission (EQC) and are managing most of the building and contents claims. These claims and costs do not include any claims that EQC is managing for the Kaikōura earthquake nor where insurance has been purchased off-shore.

The Upper South Island is north of the Waimakariri River and takes in Hurunui, Kaikōura and Marlborough districts.

The time between assessment and settlement offer for residential properties is typically between 4 and 12 weeks.

For commercial claims, 76% by number had been fully or partially settled by the end of August, compared with 72% in July and 67% in June. In dollar terms, nearly $420 million of commercial claims have been partially or fully settled.

 

Wellington homeowners urged to check for earthquake vulnerabilities

The Insurance Council of New Zealand is warning Wellington homeowners to quake check their houses after new research reveals not enough is being done by homeowners to check their biggest asset for earthquake vulnerabilities.

Wellington homes are generally older than the national housing stock which makes them more vulnerable to earthquakes.  Wellington is more vulnerable to earthquakes than many other parts of New Zealand” said Insurance Council Chief Executive Tim Grafton.

A UMR survey explored the age of the housing stock in New Zealand and asked homeowners what maintenance checks they had undertaken for earthquake vulnerabilities.

“The older Wellington housing stock clearly points to a vulnerability for the city with 21% in homes older than 75 years old (nationally 15%), 59% living in homes that were 26-75 years old (compared with 50% nationally), and 20% in houses less than 25 years old (nationally 34%)” he said.

“We live in a seismic country and have one of the longest coastlines in the world. These add up to more than our fair share of natural hazards affecting our daily lives and assets.  New Zealanders, and particularly Wellingtonians, need to wake up to spending some time protecting themselves from the risks they face” he said.

The survey found that 61% said their house had been re-piled (Wellington 78%), 72% had checked that their roof was properly braced (Wellington 77%), 70% had checked whether foundations were properly attached to the floor framing (Wellington 72%), 66% had checked to see floors were level (Wellington 75%), 57% had checked for sub-floor dampness (Wellington 63%) and 50% had checked for sub-floor borer (Wellington 56%).

“When those with homes older than 75 years old were asked about actions they had taken to make their homes less vulnerable, Wellingtonians were more responsive but there is a lot of room for improvement” he said.

“The Wellington Resilience Strategy outlines seismic risk as one of three challenges for Wellington this century, and the resilience of our homes as one of the greatest opportunities for improvement.  Wellingtonians need to aim to make our City ‘the capital that knows how to live with earthquake risk’ rather than a City that might be crippled by a seismic event” said Mike Mendonça, Wellington City Council Chief Resilience Officer.

Top 5 quake-busters:

  • Secure your hot water cylinder and your ceiling/roof header water tank.
  • Remove your chimney if not in use, or check its stability and safety if still used.
  • Correctly fasten the floor bearers to the piles and check the stability of the piles.
  • Check the foundations and the connections of the floor joists to bearers.
  • If you have a clay or cement tile roof, check the wire fixing tiles to tile battens.

“Experience from Canterbury and Kaikoura earthquakes is chimneys are vulnerable, especially brick chimneys.   We recommend people get a professional in as weekend warriors trying to remove a chimney for example is never a good idea” said Grafton.

Background on UMR survey:

ICNZ has run the UMR survey since May 2013 and has additional questions each year.  In 2017 some of the additional questions related to what was being done to check for earthquake vulnerabilities.  Data is collected via a telephone survey of a nationally representative sample n=750 New Zealanders aged 18 years and over.  The margin of error for a sample size of n=750 for a 50% figure at the 95% confidence level is + or – 3.6%.  An additional booster of n=300 Wellington homeowners was undertaken.  The margin of error for a sample size of n=300 for a 50% figure at the 95% confidence level is + or – 5.7%.

Quake outcasts decision unfair to people who insure

Future governments must pass legislation to clarify how they will treat uninsured property owners after natural catastrophes says the Insurance Council of New Zealand.   

“The settlement in the Quake Outcasts case announced yesterday raises concerns that people may not insure their properties.  While it is positive that the offer was for less than 100 percent of the property value to acknowledge the lack of insurance, there is still a moral hazard for the Crown because increased levels of government support in place of insurance will provide a greater incentive for people not to insure their property” said Insurance Council Chief Executive Tim Grafton. 

To avoid this moral hazard, successive governments have supported the EQC scheme, which provides insurance protection for events like earthquakes, landslips, volcanoes and tsunamis. The EQC Scheme attaches a levy on every insured property so if people don’t take out insurance they don’t get EQC cover.  

“It therefore makes no sense at all for the Crown to be stepping in to pay out to the uninsured. It simply it isn’t fair on all those that take out insurance” he said. 

“Clarity and certainty is required as to how the government treat the uninsured and in doing that they must avoid undermining the EQC scheme and being unfair to those who insure themselves. Specific legislation is required and the current review of New Zealand’s natural disaster insurance scheme in the Earthquake Commission Act provides that opportunity” he said.

 

July weather costs insurers $31m

Ten days of snow, rain wind and flooding in July has caused $31 million damage to people’s homes, contents, businesses, boats and motor vehicles the Insurance Council of New Zealand reported today.

The 12-14 July nationwide snow, rain and wind cost insurers $10.3 million followed closely by nationwide flooding between 20 and 22 July costing $20.9 million.

“With three months left in play, 2017 is already the most expensive year for weather events since our records began.  The two July weather events bring the total for significant weather events for 2017 to $230.2 million which now surpasses the year of the Wahine storm in 1968” said Insurance Council Chief Executive Tim Grafton.

Provisional data released today has nearly 3,600 house and contents claims costing over $16 million, 843 commercial claims at nearly $11 million and 426 motor vehicle claims costing $2.7 million.

Provisional Snow, Rain and Wind

Nationwide

12-14 July

Flooding Nationwide

20-22 July

Total for both

July events

# claims $m paid # claims $m paid # claims $m paid
House and Contents 1,388 3.85 2,208 12.26 3,596 16.1
Commercial 410 5.65 433 5.24 843 10.9
Marine 8 0.04 7 0.04 15 0.1
Motor Vehicle 157 0.73 269 1.94 426 2.7
Crops 0 0 0 0 0 0
Other 6 0.03 16 1.38 22 1.4
Total 1,969 $10.3 2,933 $20.86 4,902 $31.2

Insurance Council rejects Labour’s Christchurch earthquake arbitration tribunal

The Insurance Council of New Zealand today firmly rejected Labour’s plans to set up an Arbitration Tribunal against insurers in Christchurch.

“This is a misconceived, poorly thought through seat-of-the-pants policy that runs rough shod over natural justice” said Insurance Council Chief Executive Tim Grafton.

“Insurers have been at pains to settle claims in Canterbury as quickly as possible- over 95% of all residential claims are settled.   Insurers are committed to settling claims as quickly as possible, but the proposed tribunal is not the right way to do it.

“Insurers helped establish and fund the Residential Advisory Service (RAS) to help people navigate through their claims. This is the service Labour are pledging more money to.

Insurers waived their rights to close of claims under the Limitation Act to help people to have more time to settle their claims in response to public demands.

“We already have a free system available to homeowners to take complaints against insurers already.

“We also have a justice system in New Zealand where judges sit in judgement over cases. What does it mean to our sense of justice when Labour picks lawyers to run an inquisition over insurers?

“Who are these lawyers? Will their decisions be appealable consistent with the rules of natural justice? What is an undue delay?

“RAS, IFSO, Parliamentary Ombudsman, and EQC have also adapted their existing processes to try to settle disputes before having to go to court. These schemes have also been successful in resolving claims.

“Claims settlement delays have been contributed to by homeowners and by EQC. Would Labour be suggesting that homeowners and EQC could be liable to insurers for undue delay?  If EQC is to pay, then where will that money come from? Taxpayers?

“Insurers are still receiving over-cap claims from EQC, 7 years after the first earthquake. EQC would have to be a party to Labour’s scheme as EQC is involved in every residential Canterbury Earthquake. Is Labour suggesting EQC is liable to pay for its delays?

Three weeks to submit documents is laughable given the complexity of contested expert evidence, apportioning loss between events, etc. in so many of these disputes.

“Would the tribunal only be able to look at unsettled cases, or would it be able to reopen settled cases and consider whether there has been delay?  If the suggestion is to open up full and final settled claims, this raises serious concerns about Labour's commitment to uphold contract law.

“The proposed power to compensate for undue delays that have already happened is retrospective, and therefore flouts the rule of law. Labour expects the tribunal would not be operating until 2018 – by which time the vast majority of claims will have been settled. What will be left for the tribunal to do?

 

 

Cyclones Debbie and Cook insured costs upgraded to $109m

The two cyclones that swept through New Zealand during April and caused residents of Edgecumbe to be evacuated has resulted in insured costs of $109 million the Insurance Council of New Zealand reported today.

Provisional data released in June had 8,043 claims costing $84.4 million and the final data has now upgraded claims to 9,186 and costs to $108.7 million which makes these events the most damaging since the lower North Island storm in February 2004.

The remnants of the cyclones dubbed Debbie and Cook hit Edgecumbe the hardest and resulted in 15% of the claims by number and 50% of the value of claims received nationally for these events.

“This brings the total to date for significant weather events for 2017 to $199 million which means this year already is the most damaging year since the Wahine storm of 1968 and we are well on the way to 2017 being the most expensive year for weather events since our records began” said Insurance Council Chief Executive Tim Grafton.

Final national data released today has 7,075 house and contents claims costing $79.4 million, 1,346 commercial material damage and business interruption claims at $22.4 million and 653 motor vehicle claims costing $5.2 million.

“The weather bombs we’ve had this year highlights the importance insurance plays when disaster strikes.  We would hope that uninsured renters are now taking steps to ensure their contents are protected to see them through these types of events. And for homeowners that they check their sum insured is enough to rebuild in the event of a total loss” he said.

Cyclone Debbie (3-7 April) and Cyclone Cook (13-16 April)  Total for both Cyclones
# claims $m paid
House and Contents 7,075 79.4
Commercial 1,346 22.4
Marine 35 0.3
Motor Vehicle 653 5.2
Crops 0 0
Other 77 1.4
Total 9,186 $108.7m

Canterbury claimants should contact insurer

The Insurance Council of New Zealand (ICNZ) today urged residential Canterbury customers to contact their insurer if they have an outstanding 2010/2011 earthquake claim and are unsure on how the Limitation Act will affect them.

Back in 2015, ICNZ advised Canterbury residents that the main residential private insurers would not rely on the Limitations Act before 4 September 2017.  At that time and even today, there are different interpretations of how the Act applies in different cases.  Given the uncertainty surrounding how the Act applies, insurers and EQC have taken a range of positions.

“We encourage any homeowner with an outstanding Canterbury earthquake claim to contact their insurer to discuss the individual circumstances of their claim” said Insurance Council Chief Executive Tim Grafton.

“Residents with Canterbury claims can have peace of mind on this issue by getting something in writing from their own insurer so they can continue to focus on reaching settlement.  If customers are in any doubts about their position they should speak to their insurer” he said.

“There is no need to worry about rushing to Court and incurring costs to protect your legal position when you can simply make a call to your insurer to understand its position on its Limitation Act rights in relation to your claim” he said.

The Limitation Act applies to any claim made in the courts, not just insurance claims.  It gives a defence where more than six years have elapsed since the act or omission giving rise to the claim. The intention of the Act is to ensure that claimants do not cause undue delay bringing claims to court and provides certainty to defendants.

 

Insurance Council supports exemptions from Fire Service Levy

The Insurance Council of New Zealand is supporting the decision by the Government to exempt travel insurance and insurance on certain types of property from having to pay the Fire Service Levy.

“While we oppose the policy of taxing people who insure themselves to pay for the public good provided by Fire and Emergency New Zealand, we are pleased to see common sense reign on the decision to exempt travel insurance as well as other insured property like swimming-pools, water pipelines and tanks from the tax,” Insurance Council Chief Executive Tim Grafton said.

“Without this decision, people who took out travel insurance to holiday overseas would have been taxed even though there was no way the FENZ would have provided any service at all.  Ironically, most people buy travel insurance to cover themselves for health costs, theft and cancellations none of which involve the FENZ,” he said.

“The need for this exemption arose because the Act now requires any insurance policy that covers people for material damage to property to pay the tax.    Travel insurance does cover people for damage to property amongst many other things” he said.

“We now expect a similar common sense approach to apply to liability insurance which provides cover for any loss, not just material damage, to third parties” he said.

Background:

Parts of the FENZ Act came into force on 1 July 2017.  These latest decisions on exemptions by government give clarity to property owners and insurers and are an important step toward the new funding regime which comes into force on 1 January 2019.

How New Zealand Adapts to Climate Change Needs Stronger Push

The Insurance Council of New Zealand says the Parliamentary Commissioner for the Environment’s recommendations on long-term planning for climate change fell short in not dealing with how New Zealand should adapt to climate change.

“The Commissioner’s report Stepping Stones to Paris and Beyond borrows extensively from the United Kingdom’s approach to addressing how to mitigate climate change.  This legislates greenhouse gas targets and requires that they be met through five-year carbon budgets set by the Government and on advice from an independent expert group” Insurance Council Chief Executive Tim Grafton said.

“What is surprising is that while the Commissioner is willing to push the boat out to recommend similar legislation to reduce New Zealand’s greenhouse gas emissions, she pulls up short in making a recommendation to legislate such long-term planning for how New Zealand adapts to climate change” he said.

“It was not long ago that the Commissioner’s report on sea level rise concluded that no matter what was done about mitigating greenhouse gas emissions, sea level rise was inevitable.”

“This means no matter what New Zealand does about greenhouse gas emissions, it faces inevitable challenges in adapting to climate change and sea-level rise.  Adaptation means reducing and managing the risk of losses which will be essential to keep insurance available and affordable if losses become unsustainable.”

“Given this certainty, it is puzzling why Dr Wright did not also recommend that legislating, as the UK does, for five-yearly adaptation assessments by an independent expert group.  Instead, she has taken the weaker stance of recommending that officials who report to Ministers carry out the work and that the current Minister’s Adaptation Working group examines what the UK does.”

“This offers no long-term, bipartisan approach to the problem.   It leaves matters solely in the hands of the current Minister and her working group.”