Insurers may take over multi-unit claims
Insurance giant Vero is asking the Government to allow private insurers to manage all parts of certain multi-unit and shared property claims to speed up the process for thousands of earthquake claimants in Christchurch.
Vero chief executive Gary Dransfield made the comments yesterday in an address to the Trans-Tasman Business Circle.
"For example, Vero has recently put to Government and reinsurers suggestions regarding the management by private insurers of all aspects of selected shared-property earthquake claims," Vero chief executive Gary Dransfield said.
"We see this as not only a way to more quickly manage claims affecting thousands of people in Christchurch.
"It would also be a useful pilot of the type of innovative thinking and processes needed for any future natural disaster in New Zealand."
Dransfield has been more forthright than other big insurers in Vero's views for the need to change the way natural disasters are handled in New Zealand.
Christchurch highlighted the need for reform, Dransfield said yesterday.
"I cautioned very early in the recovery about the way a lack of experience in the management of complex, large scale natural disasters was leading to unrealistic expectations by government agencies about the pace of rebuilding."
Areas that needed to be improved between private insurers and EQC included harmonisation of claims management processes, agreement on apportionment methodology and increased involvement of private insurers in claims management, Dransfield said.
IAG New Zealand chief executive Jacki Johnson declined to comment yesterday on the suggested pilot around multi-unit dwelling claims.
IAG has recently apologised to EQC for comments in an IAG investor report saying major obstacles to settling Christchurch claims now were land remediation issues with EQC and claimants' slowness in making decisions about rebuilding and repairs.
Vero is New Zealand's second largest general insurer with about 23 per cent share. Vero has about 20,000 claims from the Christchurch quakes. It has settled about 60 per cent, paying out $2.2 billion.
An EQC spokesman, Iain Butler, said EQC was in discussions about the shared property claims management with insurers.
"EQC is working with the private insurers to develop a process for assigning a 'lead insurer' to manage the claims resolution process for all homeowners in the complex," he said.
Butler disputed apportionment was still a thorny issue between EQC and insurers.
Butler said EQC had, as promised, completed the apportionment of claims over or close to the $80,000 cap and handed these on. These claims were now with the relevant insurers.
Insurance Council spokesman Tim Grafton said in the review of the Earthquake Commission Act insurers wanted the law to define clearly what land damage was and how it would be remediated.
They wanted land remediation payments from EQC to be assigned to repairs or the rebuild unless the owner wanted to cash settle.
It was important that land had integrity before a repair or rebuilding of a house.
EQC was testing how to remediate badly damaged land and that would lead to how to quantify compensation and that would enable insurers to discuss settlements with customers, he said.
Insurer issues still to resolve with EQC:
- Harmonising claims management processes
- Agreement on apportionment methodology
- More involvement of private insurers in claims management
Source: Vero chief executive Gary Dransfield
BY THE NUMBERS
20,000 Vero claims in Christchurch including dwellings, driveways and fences
$2.2b paid out, more than 20 times its profit
$215b of fire and household insurance protection provided by Vero in NZ