Insurance Council asks Dunne to come clean on funding emergency services

The Insurance Council of New Zealand is asking Internal Affairs Minister and United Future Leader to come clean about how he would fund a national emergency response service. 

“Mr Dunne is currently proposing a 40% increase on 1 July in the tax that people who insure their properties pay to fund the merger of New Zealand’s fire services under one organisation.  That will come at a heavy cost for some and discourage people from protecting themselves with insurance,” Chief Executive of the Insurance Council Tim Grafton said.

“Now, Mr Dunne is proposing that the newly merged body, Fire and Emergency New Zealand (FENZ), take over all civil defence and ambulance operations around the country.  Unless, there is a commitment to fund FENZ from general taxation for the public good it will provide, it is monstrously unfair to load the burden for running a mega emergency service by taxing those who insure their own property,” he said. 

“This is election year and we challenge all political parties to commit funding our emergency services fairly and sustainably.  Unless this happens, the direction the Minister is proposing will see people not insuring.  If anything has been learned since the Canterbury and Kaikoura earthquakes, it is that New Zealand is one of the riskiest countries in the world for natural disaster losses and that insurance is essential to manage that risk.”

 

First Fair Insurance Code data released

The Insurance Council of New Zealand released today its first Fair Insurance Code annual report of the number of claims received, the number of complaints made to internal and external dispute resolution schemes, along with the number of significant breaches.

Insurance Council Chief Executive Tim Grafton said “Fourteen upheld complaints out of over 1.12 million claims certainly puts in perspective that insurers are meeting high standards of service and resolving almost all claims.” (more…)

Insurers settle $2.7 billion Canterbury claims in 2016

The Insurance Council of New Zealand announced today that private insurers have paid out nearly $2.7 billion in 2016 to settle commercial and residential claims resulting from the 2010 and 2011 Canterbury earthquakes.   Of the $2.7 billion, $1.6 billion was for domestic claims and $1.1 billion was commercial claim payments.

In 2016 private insurers settled 3,860 over cap property claims and had 1,258 new over cap claims transferred from EQC.  Insurers completed construction on 1,470 properties and cash settled 2,390 properties in 2016.  Of the 1,470 properties where construction was completed, 907 were rebuilds and 563 were major repairs.

“A total of 171 properties were transferred to insurers from EQC in the last quarter of 2016, a sharp fall from the 290 the previous quarter. The slow-down of overcaps coming across from EQC and the settlement progress in 2016 is encouraging.  However, it will be critical to ensure the response to the Kaikoura earthquakes does not slow the pace of settlement of the remaining claims as quickly as possible” said Tim Grafton, Chief Executive of the Insurance Council (ICNZ).

Grafton said “insurers have now fully settled $19.4 billion, or 86% of over cap residential Canterbury earthquake claims and 95% of all residential property claims.  Over 95% of Commercial claims have now been settled.”

Based on data jointly collected by ICNZ and the Ministry of Business, Innovation and Employment (MBIE), 89% (23,685) of all over cap residential claims are resolved or have been fully settled.  Resolved means the repair/rebuild is under construction, in consenting or a building contract has been signed.  A further 9% (2,283) of the 26,608 over cap claims are in resolution, meaning the rebuild/repair is in the pricing and design process or cash settlement is pending.

Of the properties still to be completed, the number of customers who are still to receive offers from their private insurer is down to 217 and there are 240 properties where people have yet to make decisions on the offers they’ve received, and 183 new claims being validated.

“Customers who have queries or concerns should seek help from the Residential Advisory Service (RAS).  RAS is cost-free, totally independent and can help provide advice and assistance that may help people progress their claim.  This service won’t be around forever and so we are urging people to make contact with the RAS or their insurer if they are unsure about the offer they’ve received” he said.

For further details see this link “Canterbury Earthquake Progress Stats Q4 2016”.

 

Kaikoura earthquake business claims reach $900 million

The Insurance Council of New Zealand announced today that private insurers have received business claims valued at more than $900 million from the 14 November 2016 Kaikoura earthquake. 

Insurance Council Chief Executive Tim Grafton said “it is early days and the figures may change but indications are that there are more than 2,500 commercial material damage and business interruption claims worth more than $900 million.”  These figures do not include claims made where assets have been insured directly with offshore insurers. 

Wellington region has taken the brunt of business losses with two thirds (65%) of the total losses, followed by Upper South Island at 25%, Canterbury at 8% and the remaining 2% from other North Island claims. 

It is too early to indicate the value of residential claims.  Homeowners have until 14 February to notify their insurers of any claims.

 

 

Boat theft on rise over summer

The Insurance Council of New Zealand are warning boaties that the number of trailered boats stolen from yards and driveways is on the rise as summer kicks off.

Insurance Council Chief Executive Tim Grafton said “New Zealand Police are seeing on average 24 boats per month being stolen throughout New Zealand. Unfortunately, the recovery rate is only around 20%.  This is partly due to the non-recording of both serial numbers and identifying features of boats, trailers and outboard motors by their owners”.

“Thieves will often disguise a stolen boat by repainting and renaming it and swapping trailers and motors, so hidden unique identifiers are important, for example a splash of paint under the seats” he said.

A significant number of trailered boats are stolen from residential front yards and driveways.

The Insurance Council and New Zealand Maritime Police recommend:

  • Store trailered boats out of view from the road and driveway
  • Chain and lock boat trailers to an immoveable object such as house foundations or a concrete-set steel ring
  • Use boat trailer wheel clamps
  • Use purpose-security locks for the outboard motor. Outboard motors, particularly the newer models are frequently stolen regardless of how heavy they are
  • Remove auxiliary motors from the boat and all gear if the boat is stored out in the open
  • Record serial numbers and any identifying features of your boat including motors and trailers.  Unique identifying features that will not be obvious to thieves should be recorded.
  • Keep digital photographs and cell phone images.

Burglaries cost $400,000 per day in festive season

Christmas time is the busy season for burglars with a higher chance of homeowners being away from home on holidays, out shopping or socialising with friends and family.

Insurance Council figures show that there is traditionally a steep rise in burglary related claims in the December-January period with the last 21 day festive season claims costing $414,000 per day.  The last Christmas period (20 Dec 2015 to 10 Jan 2016) saw 2,654 burglary-related insurance claims worth $8.7 million from private houses and commercial premises compared with 2,085 claims worth $6.15m for the same period in 2014/15.  Two burglary claims in this last Christmas period were for over $100,000 each and 183 burglary claims over $10,000 each.  This compares to one over $100,000 and 137 over $10,000 for the same period the previous year.

“No one wants to become a burglary statistic and so we are urging people to see their property from a burglar’s point of view.  Taking 10 minutes now to think about how you can better protect your property from the increased risks of burglary and loss at this time of year could save a lot of heartache later,” said Insurance Council Chief Executive Tim Grafton.

Here are some basic common sense actions to protect your property:

  • Don’t advertise that you are away, including on social media. Leave some lights to come on at night with timers, arrange someone to collect your mail and stop your newspaper. Make it appear that there is someone at home.
  • Don’t leave a phone voicemail saying that you’re away.
  • Check door locks and windows stays.
  • Check the security of your garage and outbuildings.
  • Have sensor lights fitted near entry points.
  • Record serial numbers of expensive items on the SNAP database (www.snap.org.nz). Take photos of your items and upload them.
  • Lock away jewellery, portable electronic devices and any other valuables.

In addition, it’s important to check with your insurer what you are, or are not, covered for under your home and contents policy if:

  • you are away from your home for a longer period
  • friends are staying in your home while you are away
  • you are planning to make your home available for a house swap.

Simpler process for settling Kaikoura Earthquake claims

An agreement between private insurers and the Earthquake Commission (EQC) will simplify how home and contents insurance claims are resolved for people affected by the Kaikoura Earthquake.

Under the agreement, private insurers will act as EQC’s agents and receive, assess and settle home and contents claims for earthquake damage from their own customers, even those claims that are under the EQC cap.  EQC will assess land damage as land is not covered by private insurance policies.

Customers are encouraged to lodge a claim with their private insurer in the first instance.  Where customers have already lodged home building or contents claims with EQC, these will be passed onto their insurer by EQC so there is no need for people to make another call.

Tim Grafton, Insurance Council Chief Executive said, “We are approaching this in the spirit of good faith to benefit homeowners who will have their own insurer manage their claim from beginning to end.  This will deliver efficiencies for everyone by reducing double handling and speed up settlements.”

EQC Chief Executive Ian Simpson said the simplified approach for home and contents claims is an example of how insurers and EQC can work together to improve the claims process for customers.

“This approach draws on the experience we have gained from settling hundreds of thousands of claims following the Canterbury, Eketahuna, Cook Strait and February 2016 earthquakes. The new approach will be more efficient and will mean we can make the best use of the country’s loss adjusting expertise to deliver a better result for customers,” he said.

The agreement is between the EQC and the Insurance Council of New Zealand’s members who offer home and contents insurance.

The simplified approach will not change customers’ entitlements under their insurance policy or the EQC Act.

For more information:

MOU backgrounder

EQC and Insurers want a good claim experience for people making contents and residential building insurance claims arising out of the Kaikoura earthquake event.

EQC and the Insurers have together worked hard, in urgent circumstances, to identify a basis on which each Insurer can assess and settle EQC claims.

In the time available it has not been possible to think of everything. Regular and timely communication is continuing at a senior and operational level to identify and resolve potential issues as they arise.

The following insurers will be appointed as an agent of EQC for their own customers and will be legally responsible, on EQC's behalf, for lodging, assessing and cash settling certain claims arising out of the Kaikoura earthquake event:

  • AA Insurance Limited
  • Farmers' Mutual Group & FMG Insurance Limited
  • IAG New Zealand Limited (State, AMI, Lumley, NZI and Lantern brands)
  • Medical Insurance Society Limited (MAS brand)
  • QBE Insurance (Australia) Limited
  • Tower New Zealand Limited
  • Vero Insurance New Zealand Limited
  • Youi NZ Pty Limited

As an agent of EQC, insurers have agreed to act as they normally would as professional managers of claims and in accordance with the EQC Act and EQC’s policies.

Insurers will receive EQC Act training to ensure compliance with the Act.

Any insurer that has not already joined this MOU can join at a later stage by making that arrangement with EQC.

All settlements up to the cap (usually $20,000 for contents and $100,000 for home dwelling) paid by the Insurer to a customer are binding on EQC. Upon receipt of an invoice from the insurer, EQC will pay the insurer within five business days.

The following claims are out of the scope of this MoU:

  • all land claims;
  • all claims relating to properties with prior EQC earthquake claims that are still open or otherwise unresolved (including all outstanding remedial claims, complaints and litigation from the Canterbury Earthquake Events)

Insurers will identify vulnerable customers and prioritise using the Human Rights Commission’s guidelines for insurers.

Insurers will be paid for their claims handling expenses by EQC. These agreements are being negotiated bilaterally between individual insurers and EQC.

EQC will audit claims from time to time to ensure compliance with the EQC Act.

EQC and insurers will obtain appropriate privacy waivers from customers to share information to expedite the customer’s claim.

  • A Steering Group (senior members of EQC and insurers) will:
  • have oversight of all aspects of the claims management process, with a view to early identification and resolution of any issues arising in future
    establish and monitor appropriate KPI’s (e.g. settlement timeframes)

A protocol will be developed to address how customer complaints will be handled.  At present both EQC and insurers have existing but separate complaints processes. The new process will mean the customer will continue to have access to free, independent dispute resolution.

Failure to comply with standards a likely cause of Wellington commercial building damage

The Insurance Council of New Zealand believes a significant cause of damage to commercial property buildings following the 14 November Kaikoura earthquake series is a failure to comply with non-structural, seismic restraint guidelines. 

Non-structural, seismic restraints hold air conditioning, fire-sprinkler, telecommunication, electricity systems, lighting and ceiling support systems in ceiling cavities and other parts of the building.  These can collapse and pose risks to life and property. 

“We believe many buildings have had these systems installed and do not comply with New Zealand standard guidelines set for their installation.  Appropriately, there is a strong focus on engineering sign-off of structural elements in buildings, but there is little or no monitoring or thorough inspection of the non-structural elements,” Insurance Council Chief Executive Tim Grafton said. 

“Following the Canterbury earthquakes, a significant amount of the commercial property damage was due to the failure of these non-structural seismic restraints.  It was also a significant cause of the damage to the BNZ building on Harbour Quays in 2013 following the Seddon earthquakes. As a result, the Insurance Council submitted twice to Parliament’s Local Government and Environment Select Committee on the issue in 2014 and 2015 to draw attention to the problem.  We hope that following the most recent earthquakes there will be renewed attention brought to the issue,” he said. 

The Insurance Council submission to Parliament suggests that territorial local authorities require non-structural seismic restraints as part of building Warrant of Fitness inspections.  These are also matters that should be certified as compliant by engineers on completion of new buildings.

Earthquake insurance advisory: Temporary Accommodation

The Insurance Council of New Zealand advise people who have uninhabitable homes due to earthquake damage to contact their insurer directly for help with temporary accommodation.

Most home policies as well as contents policies provide cover for temporary accommodation and emergency evacuation.  Each policy wording will differ so people should check with their insurer.

Tim Grafton, Insurance Council Chief Executive said “people who are renting and only have contents insurance may not be aware that they probably will also have cover for temporary accommodation”.

Key points from Home policies:

  • Contact your insurer first – they must agree
  • The home needs to be uninhabitable due to loss
  • Covers you and your domestic pets
  • The choice of temporary accommodation needs to be reasonable i.e. a similar standard to your existing house
  • It doesn’t cover additional costs such as travel, letting fees, utilities, meals, phone, internet
  • You are covered, even if the damage to your house is under $100k EQC cap
  • Limit of cover will be to a dollar value – each policy is different, so check
  • Some insurers will pay you direct and others you’ll get reimbursed –  discuss with your insurer
  • Some policies will also cover you where your home is otherwise safe and sanitary, but you are prevented from accessing it by order or direction of government or local authorities
  • Reasonable moving or storage costs are covered

To decide what counts as uninhabitable, insurers will assess on a case by case basis and are likely to ask questions such as:

  • Is the home safe and structurally stable?
  • Has a Government/Local Authority issued instructions for you to vacate the home?
  • Is the home secure against theft and outside elements (e.g. watertight?)
  • Can the kitchen and bathroom be used?
  • Can people sleep in the home?
  • Is there water? Electricity?

Key points from Contents policies

  • If you are renting and only have Contents insurance, check with your insurer as most insurers will cover your temporary accommodation
  • There must be damage caused to your contents to be eligible for the temporary accommodation benefit
  • Insurers will also pay for the temporary storage of your contents – including removal and returns. Reasonable costs of emergency evacuation is also often covered in home and contents policies if the evacuation is due to safety concerns or other emergency and the police or a local authority has advised against you living in your house or you are unable to access your home.  This cover needs to be agreed in advance with your insurer. Residential body corporates should contact their insurance broker, if they have one, or their insurance company directly.

Availability of new insurance for house purchases post 14 November earthquake

The Insurance Council of New Zealand advised today that insurers are working hard to minimise any disruption to the availability of insurance for people putting offers in on houses.

Following the 14 November 2016 earthquakes, there has been some disruption to the availability of insurance for people seeking new or increased insurance cover.

Globally it is typical after a significant natural disaster for insurers to place a widespread embargo on new business or requests to increase existing cover.

Tim Grafton Insurance Council Chief Executive said “That can narrow down very quickly as the concentration of losses is established, but in the worst hit areas this will take longer depending on the settling down of seismic activity.”

“In the interim, our advice to people who are in the process of buying a new property where settlement is subject to insurance and finance, is to check with the vendor’s insurer to see if they will provide cover as that is a common solution”, he said.

In the Canterbury earthquakes, insurers supported the housing market by initially coming back on risk fairly quickly but then as more seismic events occurred it took longer to return to business-as-usual.  In the 2013 Seddon earthquakes, this embargo generally lasted a couple of months.

The reason for insurers to be cautious is to minimise additional losses in order to meet reinsurers needs and keep insurance affordable for all.  Insurers need to make prudent decisions to minimise the risks they take on in an uncertain environment.

Each insurer will have a different approach depending on their appetite for risk, so people should shop around.

The Insurance Council’s advice on a 3-step approach:

  1. Contact your own insurer first
  2. Contact the vendor’s insurer
  3. Shop around.