Community Update 17 August 2011
As this winter chill continues to bite you may want to check the Council’s media releases.
http://www.ccc.govt.nz/thecouncil/newsmedia/mediareleases/2011/201108121.aspx#jumplink1. While stuck inside you may want to check out the new Central City Plan? http://www.centralcityplan.org.nz/resources/Draft-Central-City-Plan.pdf
Mt Pleasant / Redcliffs resident architects/designers
The Association has been asked to publish a list of local Mt Pleasant architects for those living on the hill looking at rebuilding. Please click this link to find that list.http://tiny.cc/40vd0
Report on second page from CanCern regarding AMI and Arrow Processes
Ferrymead Men’s Probus Club
The Ferrymead Men’s Probus Club meets monthly on the fourth Thursday at Redcliffs Bowling Club, James St, Redcliffs 10am. If you are recently retired or have been retired for some time you will enjoy what Probus has to offer. The meetings are informal with a short business meeting and usually a mini talk . Following morning tea is a talk which is always interesting and informative. The annual subscription is $25.00. If you are interested in joining contacts are: Graham Lawn 384-0417, Roger France 384 3074, Ian Dewar 384 3859
University of Canterbury Earthquake Lectures
The University of Canterbury Earthquake lectures are now available on the University’s website: http://www.communityed.canterbury.ac.nz/public_lectures.php. After each lecture allow around 4 or 5 days for the link to be updated on the website.
Art of Living Free De-Stress workshop 25 – 28 August
Includes powerful breathing techniques, yoga, yogic wisdom and meditation.
Upstairs at Delta Community House, 103 North Avon Rd, Richmond, Christchurch – enter from Petrie St. Thurs 25 Aug 6.30 -9.30pm; Fri 26 Aug 6.30 -9.30pm; Sat 27 Aug 9.30am – 2pm Sun 28 Aug 9.30am – 2pm
To register, contact Jill Baxter aoljill@yahoo.co.nz
CanCern Report
AMI and Arrow Processes and Q&A: July 2011
This information was collated as a result of a meeting with AMI and Arrow staff and has been ratified by both AMI and Arrow. CanCERN would like to thank AMI and Arrow for the time and energy they have given to this process.
Terms
PMO – Project Management Office
PM – Project Manager
DRA – Detailed Repair/Rebuild Analysis
Arrow’s Process for Making Assessments
1. Claim into Arrow register (all details and correspondence are tracked)
2. Ring around led to prioritising (for matters not then assessed)
3. Priority established on a “plight” basis. This is not ongoing. It was a once only.
New matters are given a new priority to fit in with the group of notified claims as at July 2011.
4. Customer advised by letter
5. Arrow management assigns project manager (PM)
6. PM will ring clients to make assessment time
7. Homeowner fully involved – walk around the property
8. Floor levels taken and detailed assessment done – 1-6 hours (Decision will not be given to the homeowner as it is not PM decision)
9. PMs report – goes back to client to check information and make sure all things have been noted and things of value captured and noted. Is it reflective of your house?
10. PM modifies and report then forwards to Quantity Surveyor for costing
11. QS forwards to PM then through POD Manager and back to AMI
12. AMI works up a Decision Pack and issues to customer. A small number of customers may be invited to meet without a Decision pack – for example those with Market Value Policies and Rental Properties (as the options are different)
13. In future, AMI will contact the client to discuss the assessment and options for settlement. At present, AMI awaits a contact from the customer
14. Client makes election decision (if in Red zone and not selecting Option 1)
15. Settlement can occur once AMI and the client have signed off on the Detailed Repair/Rebuild Analysis (DRA). Signing off the DRA as a true reflection of their house and signing the discussion points around special items and demolition notes (if a rebuild).
16. If the customer decides to manage their own build and take a cash settlement (for a rebuild) rather than staying within Arrow PMO, Arrow is still contracted to complete the demolition (unless in the red zone which the government will undertake itself, charging AMI). They will work with the homeowner to arrange timing and homeowners can be at the demolition to retrieve things that have been discussed at the handover meeting and noted on the DRA where safe to do so.
17. Arrow manages the process from there.
Disputes Process
AMI is putting in place independent construction specialists to make decisions in disputes that relate to the repair/rebuild process. Once it has been established the client is disputing the AMI offer, AMI will withdraw its offer and allow the independent to make its assesssment. Decisions will be binding on AMI but not the homeowner. The dispute process is a free service. If the homeowner is not happy with the outcome, they can take it to the next level – Insurance Ombudsman (free service to the customer but with genuine building technical evidence likely required to support assertions) or possibly District Court but the cost is with the homeowner if they lose. It is expected this will only be used for major disputes.
There is some discussion being held amongst insurers and others about an umbrella external dispute resolution system for all insurers. This is still in the very embryonic phase of discussions.
AMI Customer Support – Customer Advocacy
· Advocate for both the client and AMI – clear and fair processes
· The Fair Insurance Code – http://www.icnz.org.nz/regulation/fair-insurance.php
· If there is an issue that the Pod can’t deal with and reaches a “deadlock”, the issue goes through to the Customer Advocate who will call for all information, reviewing the positions of the claim.
· Issues that have been through this process may set precedents for other similar issues.
· Letter of deadlock from Customer Advocate is required for a customer to access ISO
· Customer Support may ask people to choose independent assessor/expert from AMI’s panel which could lead to a resolution that is binding on AMI.
· If the issue escalates to the ombudsman, there is an issue where they only deal with situations under $200K.
· Customer Support is not there to advocate for clients right from the beginning. People can take their own support.
· No-one in AMI can give financial advice.
The Rebuild Planning Process with Arrow
1. Arrow will work with the client – either with an architect and builder or group home company (depending on what kind of house you currently own)
2. If it is a group builder home, clients will go to a variety of group home builders (Arrow has pre-qualified approximately 80 companies) and in discussion with the clients choose 2 they think would be appropriate for the build.
3. The PMO puts out 2 requests for tender to these 2 companies based on photos, DRA, scoping. The group home company will be aware of the type of home the client wants, size, etc and any other features the client may have added. This is all noted during the DRA discussions.
4. One builder is selected and PM will work with Home builder and client to finalise the design plans. The contract is then drawn up between AMI, the client and the builder. Arrow is not part of the contract but is managing the process. They will do site inspections, review site Health and Safety, sign off progress payments which AMI will make. The PMs manage through until completion. Then there is a 90 day warranty period after which the final payments are made if the client and Arrow are satisfied.
5. If an Architect or Architectural Designer is required (separate to the builder) then Arrow will engage this resource in consultation with the client. Plans will then be developed- a process managed by Arrow and involving client consultation as required. Once the plans have been finalised a builder will be procured as outlined in items 3 and 4 above except the finalised plans are used rather than the DRA/photos/etc.
The Detailed Repair/Rebuild Analysis (DRA)
· Includes details on building description, foundation description, roof and elevation, internal damage, site description, land damage, site attribute damage, repair methodology and assessors conclusion, outside EQC scope, services, room dimensions, total as build area as measured from the outside of the house
· If there is a discrepancy between insured size and measured size that comes within 10m2 or $14000 it will proceed without further investigation. If the discrepancy is beyond this and investigations show it was the insurer’s mistake, it will also be covered.
· There are two copies of the DRA made – one for AMI which includes contents, architects fees and Arrow fees and one for the client which excludes these figures
· Clients and AMI will be asked to sign the DRA agreeing to the record of conversations, discussion points concerning demolition and like for like and acceptable changes if customer elects a rebuild
· The job moves to Arrow officially when the DRA is signed and the client agrees to a settlement option requiring AMI to repair/rebuild the client’s house.
· The process from initial assessment when the DRA is issued to AMI takes about 2 weeks but the backlog is adding several more weeks. Resources have recently been added so the process could speed up again.
· An alternative process has recently been introduced to replace the DRA. This process is called the Site Specific Assessment (SSA) and is intended for use for assessing group-builder type houses only. This assessment takes less time and has been introduced in an effort to allow all AMI inspections to be undertaken by Christmas 2011. The SSA has been thoroughly tested and is as accurate as the DRA but provides less detail.
AMI Pods
· People will have email addresses and phone numbers of their Pods via a letter going out to clients.
· The Pods are not physically separate. They are all in AMI HQ but are arranged according to geographic areas.
· If you have houses in different Pods, one of the Pods will take the file of both houses IF THEY ARE AWARE YOU HAVE MORE THAN ONE CLAIM.
· If the house is assessed as a repair, the house will generally be repaired rather than the homeowner getting the cash figure for the repair. This is to ensure the work is done well and the house is insurable. AMI does have the option of a cash payout for a repair if that is the best option for AMI.
· Red Zone repairs will get a cash offer if the cost of repairs is more than the GV of the house. It is likely that customers will choose the government option
· At a handover meeting the contract options are explored and homeowners can choose their own preferred builder as long as the builder is licensed and fits within the price structure. If they choose their own without Arrow project management, AMI’s liability for any remedial work subsequently does not apply.
· There is no cash figure for a rebuild amount. It comes down to market value amount or if the client wants to self manage, they are required to provide a signed, fully costed building contract. If the figure is less than what Arrow costed it out at, the client will get that lesser value. If it is more than what Arrow costed it out as, they will only pay what Arrow’s costs were. Self managing people need to be careful about the risk of increased costs. Eg, If the guidelines change for foundations, clients may face increased costs which they cannot go back to the insurer for.
· Market Value Minus Depreciation: look at the age and condition of building and apply a depreciated figure to it from its life span and how it’s been maintained. This is the valuer’s job and how houses are always valued.
· Replacement value is the cost it would be to rebuild the house
· Market value is the valuation for sale purposes (what you would get on the market if it was sold)
· Market value and Indemnity value mean the same thing. Market valuation for insurance purposes for indemnity. Indemnity is depreciated value. The cash settlement is indemnity. (Based on the idea that the value of a house is in the land rather than the house). Refer to policy conditions
Questions
· Why does there appear to be a difference in DRA’s with some being more specific than others? Floor levels and out of plumb in the walls is one of the key indicators as to whether it will be a rebuild or not. If the assessor is fairly confident it will be a rebuild, it will be a more generic assessment. If it looks like a repair, the assessment will be more detailed. If they are not sure, they will do both. If there is any question about the structural integrity of the house or the land, Arrow will bring in structural or geotechnical assessments.
· If a rebuild assessment is more generic, how do AMI capture the special features in the house, E.g. rimu panelling? Captured in DRA and costed by Quantity Surveyor as per what’s seen in photos or captured on site.
· Is there a standard costing for things like rimu panelling which is then built onto the price per metre? Yes but there is discussion about whether or not you will be paid at this price if you are not ‘using’ the feature. Eg. carpet over rimu flooring. This will be done on a case by case basis. This will be worked out in negotiations. AMI’s policy does not use the words ‘like for like’. It says to replace with materials which are commonly used. This means they would be legally allowed to replace the flooring with chipboard. AMI chooses to do what’s fair and reasonable so generally use a ‘like for like’ principle when assessing. You can use the cost of features which you may not want to replace in your new home in different ways. Eg. not replace rimu panelling with cedar but put the sum of that rimu towards some other aspect of your home (within reason). You cannot take it as a cash ‘overflow’. Homeowners can take independent costings to Arrow and they will be measured against what Arrow has done. The costings are not set in stone if they can be reasonably challenged.
· Does Arrow’s assessment cover all aspects – driveways, fences, etc as well as house? Yes. ‘Out of scope’ covers those items not covered by EQC and ‘OverCap in scope’ is the house and outbuildings. Both will be itemised on the DRA. Contents such as carpets and drapes are not captured in the DRA.
· How are AMI doing costings for houses in the Red Zone with regard to costing foundations? They cost it out as repair subject to land so the land issue is taken out of it. The foundations are not costed according to the land it is on. This is based on the belief that it is EQC’s responsibility to lift the land so the insurer just has to cost from the foundations up. Because the land is not going to be fixed, the government is offering the value of the house, meaning the repair is only for the house not including re-piling the foundations that would be needed for that specific piece of land. They cost what was there. This seems to be common across all insurers. It can only be costed as a new foundation to DBH standards on land. AMI plans to meet with repair people in the Red Zone.
· Is this the same for land in the designated flood zones? The flood levels are not yet known and it always comes back to the question, ‘is the house repairable?’
· Will PMs have cases in the same area with a mind to co-ordinating repairs when land is a factor and rebuilds? To a point but at the moment vulnerable people are being prioritised so they could be anywhere within that pod zone. AMI is working with other insurers to get a common build where houses are joined or when co-ordination is necessary such as shared driveways and boundary fences.
· Can people get their own costings done and will they be accepted? Yes. If there is a discrepancy between costings, all will be involved in those discussions to sort it out. If the difference cannot be resolved, people have the option of engaging in the disputes process. Homeowners are welcome to take anyone they want to the negotiation meetings.
· How can we trust AMI and Arrow’s costings? Arrow needs to know they can do the work for their budget because otherwise AMI will question their quoting. AMI needs to make sure the price is fair coverage and doesn’t continually go over because reinsurers will ask questions. The cost only becomes an issue if the client selects to buy another home or a customer-managed rebuild because all other settlement options will have the costs met by AMI.
· Will the costings take into account the fact that people may not be able to complete work for years yet? Inflation is the insurers cost – unless the client takes a cash settlement. If the house is a rebuild, there is not a dollar figure next to the agreement because the total cost of the rebuild will be covered (regardless of any increase in costs between now and rebuild date).
· What happens if there is another earthquake during the rebuild – who covers the insurance? Build companies cover build insurance. AMI is obliged to keep the place covered and insure at completion but are still in the process of trying to get construction insurance to be able to do this. At this stage, they may have to cover this cost themselves.
· Can people buy houses and swap (reassign) settlements if for example a Green Zone person wants a Red Zone house so they can get out? From an insurance perspective, yes but it will depend on whether the government will allow the offer to be made to someone other than the original owner.
· How is the figure worked out if you want to buy an existing house? The figure is based on the figure it would cost to rebuild your house minus certain fees – contents, Arrow managed costs, (although there are project management fees already built into rebuild costs) and design fee (not an incurred fee). This is not an easy concept to understand so Arrow will go over this with you in a meeting setting. Geotech/ solicitors fees are included in the total fee you will be offered but you have to recognise this and not spend the total amount on the house. If purchase price is less than the rebuild incurred professional fees can be reimbursed up to the rebuild amount
· Can people choose to take Option 2 and negotiate with the insurer but choose Option 1 if that works out to be a better offer and what if it is outside of the 9 month timeframe? From AMIs perspective, this is ok but it would depend on what CERA allows.
· If you are a rebuild in the hill suburbs, will your house be designed by an engineer rather than having to have a group home build that is not designed for the hill? If the Council requirements are that the house is engineered for the land, that is what insurers must do to meet compliance. That does not necessarily mean they have an architecturally designed house if they did not have one before.
· What is AMIs opinion on Uretek? AMI is using it according to the circumstances of the house as it meets Council’s standards of durability over 50 years. However, it will depend on the state of the house and they are not interested in using it in 50/50 situations. Arrow makes the call as to whether or not it will be a suitable repair. It has been used for 30 years overseas. AMI will consider putting education information about Uretek out in repair information packs.
Things to note:
· Arrow Pods mirror AMI Pods – 350-500 claims in each pod
· When claimants get to negotiations stage they will have ONE claim manager, not a number of people
· All information AMI receives in now forwarded to Arrow – makes it easier to prioritise claims
· All Arrow repairs in Orange Zone on hold until land classified Green or Red. Assessments in Orange are still happening.
· Over cap claims stay in CHCH, others go to Auckland driveways, fences, pathways (Known as Out of Scope), Contents, Temporary Accommodation; Loss of Rent. Too many claims to resource with here and as a risk management technique (not all in ChCh).
· People with significant damage that have not yet been assessed by EQC should contact AMI directly
· The repair assessments can be more detailed than the rebuild assessments as the repair assessment notes all damage to the insured element of the property and identifies repair methodologies.
· AMI and Arrow will get through all assessments by Christmas for those claims lodged by June 11 (the vast majority). Others will be assessed in the new year. (Red Zone by early September)
· AMI will continue to insure clients in new premises in green zones. Alternatively, if people who were not previously AMI clients buy a house that was insured by AMI (that is not in the Red Zone), AMI will continue to offer cover. Rebuilds will require a geo-technical clearance
· AMI is prepared to have independent people carry out costings to measure against Arrow costings to show people that their figures are fair.
· There is no time pressure to sign an agreement. It is in some respects better for AMI if things are spaced out over a period of time. Land availability may become an issue which will slow the process.
· You can build anywhere in NZ as long as the land is comparable and does not increase the rebuild costs.
· Things have changed after the February quake and are far more flexible now but this also adds to mixed messages.
· AMI is happy to refer clients who may need extra advice (financial, etc) if CanCERN provides a list. CanCERN is currently looking at the options for providing support people.
END
