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.
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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.