Insurance disputes - where do you turn?

20:14, Aug 04 2011
Karen Stevens
Karen Stevens is New Zealand's insurance and savings ombudsman.

You are at your wits end. Your insurance company won't pay what you think it should pay and no one will budge.

Lawyer's fees are expensive, so what do you do? Don't give up. The equivalent of a 111 emergency call in the world of insurance is 0800 888 202 and you'll reach the office of Karen Stevens, the insurance and savings ombudsman (or the ISO as it's known). You'll never believe it, but the service is free.

Before you get too excited and start jamming the phone lines with complaints, it pays to know that the ombudsman is not an ambulance service that will come to your rescue. The ombudsman is not a consumer advocate - simply an impartial referee who will make a ruling on your dispute, without favouring either side. Your insurer will have to abide by the ruling, so it's a good way to solve a disagreement.

Janine Starks
Financial agony aunt: Janine Starks

Without wanting to be a complete party-pooper, the straight-up truth is that 67 per cent of people lose their case when they go to the ombudsman. But we may as well take the glass-half- full approach: the other third prove their insurer is wrong, which is quite good odds. In actual fact, half of these cases settle with their insurer, without the ombudsman making a ruling. The other half either win out- right or partly win.

Truth be known, insurers don't like going to the ombudsman, so you'll find they'll try pretty hard to settle a dispute with you before it gets that far.

The $200,000 claim limit - is it enough?


At first glance, the limit of $200,000 seems a bit hopeless for the likes of Christchurch earthquake victims. One of the most common disputes is going to be whether a house needs to be demolished or repaired, with both sides probably producing evidence. With the average home costing in the range of $300,000 to $500,000 to replace, homeowners will be worried about their options in sorting out a dispute, without a trip to the court.

All is not lost though, because when you read the fine print, it's not always the full value of the dispute that counts. It's only the portion that you can't agree on. For example; your insurer says the value of your claim should be $300,000, but you have expert opinion to the contrary, saying it should be $500,000. You are arguing over $200,000, which means you are within the limit set by the ombudsman. Also, if your insurer agrees to let the ombudsman hear a claim for more than $200,000, their service can be used. Just for completeness, the limit is actually $200,000 + GST (GST does apply to the rebuilding and repair of homes), so the limit is $230,000.

To be honest, it would be enormously helpful if the $200,000 limit could be extended for Christchurch earthquake victims. There are going to be so many issues over the "repair"-or- "replace" debate and the values are worlds apart in dollar terms.

Before you even approach the ombudsman's office, there are three things you need to do (if you don't do them, they'll just send you scuttling):

Step one: Check your insurer is part of the ISO scheme (most are). Visit the website and go to the section called "Participants" - type in their name in the search facility.

Step two: Put your complaint through the insurers official internal complaints system.

Step three: Ask your insurer for a "letter of deadlock" (at this point they'll know you are very serious). This letter lays out why the insurer disagrees with your claim. Once you have the letter, you can approach the ombudsman.

As a final tip - collect your evidence. The ombudsman does not operate on a "he-said-she- said" basis. Get all your expert opinion in writing, on letterhead. Every point you make needs to be backed up by someone independent and qualified to make an assessment.

EQC and the ombudsman

The insurance and savings ombudsman does not deal with disputes with EQC. A different service known as the "Office of the Ombudsmen" looks after government departments. There are currently two ombudspeople, Beverley Wakem and David McGee, who can be contacted on Christchurch (03) 357 4555, Wellington (04) 473 9533 and Auckland (09) 379 6102 or complaint@ombudsmen.parlia Again, you must have proceeded through EQC's internal complaints system before contacting them.


FREE - no cost to you. $1.2 million the cost to insurers in levies to run the scheme. $200,000 the maximum claim you can make.

CONTACTS 0800 888 202 Email: Web:

1985 - the number of inquiries made.
334 - the number of complaints that couldn't be heard as they were outside the ombudsman's jurisdiction.
284 - the number of complaints investigated.
96 days - the average time it takes to settle a complaint.

67 per cent - the proportion of people who lost their case with their insurer.
16 per cent - the proportion of people who settled with their insurer, before the hearing.
14 per cent - the proportion of people who won against their insurer.
3 per cent - the proportion of people who partly won their case.

90 per cent say their case manager was helpful and easy to talk to.
90 per cent agree the decision about their complaint was explained clearly.
88 per cent of people say the service is easy to use.

* Janine Starks is co-managing director of Liontamer Investments. Opinions in this column represent her personal views and are not made on behalf of Liontamer. These opinions are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.

Email questions to, subject line: Financial Agony Aunt. Anonymity is guaranteed.

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