June 25 2014
INSURANCE COUNCIL URGES UNDECIDED CANTERBURY EARTHQUAKE CUSTOMERS TO SEEK FREE ADVICE
The Insurance Council of New Zealand is urging 1,500 over cap Canterbury earthquake claimants who have still not made decisions on insurance settlement offers to seek free, impartial advice.
The number of over cap claims transferred to insurers is expected to grow this year as the Earthquake Commission completes its land settlement programme.
“We anticipate the rate at which over cap claims will be transferred to insurers to increase and the number of those who are undecided about their offers to balloon,” says Insurance Council spokesman Samson Samasoni.
In April 2014 the number of ‘undecideds’ had almost halved from the December 2013 level of 2,600 to 1,508.
The Insurance Council credits the drop to the comprehensive, ongoing support services insurance companies established to guide customers through the options and their decision-making process.
Agencies such as the independent Residential Advisory Service (RAS), providing impartial advice and helping to facilitate a resolution with their insurer, have also contributed.
In April 2014 private insurers and claims management companies had a total 22,455 over cap claims, with 87% settled or resolution agreed with the customer.
The number of over cap claims increased by nearly 700 dwellings in 9 months from 21,766 in July 2013 to 22,455 in April 2014.
“But we’re expecting the overall number of over cap claims to continue to grow, so the sooner people can make decisions about the options presented to them, the quicker their claims can be settled,” he says.
Of the 22,455 over cap with insurers, 9,875 (44%) are fully settled and 9,704 (43%) have been agreed with the customer and are pending settlement.
‘Pending settlement’ means there is a builder on site, the case is in the design & documentation phase, in the rebuild queue or the customer is about to get their cash settlement.
“It’s taking anywhere from 52 to 76 weeks to fully settle an insurer-managed rebuild or repair, largely because the design and documentation phase is taking much longer to complete than was first expected,” says Samasoni.
The sort of design and documentation phase issues that have to be worked through include land repair, multi-unit building issues, retaining walls, flood issues, consenting, contaminated land and customers with changing design requirements.
“There are 1,368 customers who have still to be made an offer because they’ve only just been made over cap or are in a complicated multi-unit, for example,” says Samasoni.
“While we expect that some of the ‘undecideds’ may end up in a protracted dispute there are many who also could be progressed towards settlement with impartial advice and support,” says Samasoni.
“We understand that some of the undecideds are awaiting their land settlement offer from EQC, often insurers are able to take deed of assignment over the land claim which then allows for the repair and rebuild to commence,” says Samasoni.
“Insurers fully appreciate that people are making very difficult decisions and it takes time to work through the issues and that’s partly why insurers have agreed to help fund RAS for another year,” says Samasoni.
RAS is jointly funded by the Canterbury Earthquake Recovery Authority, the Earthquake Commission and the insurance industry.
“Insurers have agreed to inject a further $335,000 to fund RAS for its second year because it’s proved to be very successful at independently helping customers with free advice and facilitating discussions with insurers to find a resolution,” says Samasoni.
“In fact, insurers are the leading referrers of customers to RAS because they’ve seen the benefit of the customer being supported by an impartial, qualified and free advisory service,” says Samasoni.
ICNZ is also concerned that there are irresponsible advocates or legal advisors preying on confused and vulnerable undecided customers by encouraging them to take court action in the expectation of a major financial windfall.
“Encouraging people to go to Court, regardless of the merits of their case, not only puts a halt to the customer’s recovery progress but substantially extends the timeline for settling a customer’s claim,” says Samasoni.
“The court process can also cost customers substantial sums for work that could be done through the RAS for free,” he says.
“In a dispute, the first option available to customers is the internal disputes resolution services within the insurer, then there are also registered disputes resolution services such as the Insurance and Savings Ombudsman.
“We would definitely encourage people to use independent services such as the RAS because in many cases the disputes are not legal issues but technical matters relating to differences about engineering assessments of damage,” says Samasoni.