Major insurers deny 'passing the buck'

MICHAEL WRIGHT
Last updated 05:00 17/11/2012

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Christchurch Earthquake 2011

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Vero Insurance has rejected a "speculative" claim by the Earthquake Commission (EQC) that providers may try to pass the buck on their earthquake costs.

In the commission's 2011-12 annual report, released last week, chairman Michael Wintringham said private insurers faced paying huge sums to settle commercial and residential claims in Canterbury

"In this environment, there is an incentive for insurers to reduce their own liabilities by shifting costs to the Crown or to other parties," he said.

Vero chief executive Gary Dransfield dismissed the comment as "speculative [and] unsubstantiated".

"It suggests insurers would act or are acting improperly and in a manner not in the interests of New Zealand, its Government or the people of Canterbury," he said.

"The reality is that the contribution of insurers to the Christchurch recovery has saved the Government billions of dollars."

Insurers and reinsurers would meet about 80 per cent of the rebuild cost, Dransfield said, and private insurers had already paid out $5 billion in claims.

"If that cost had to be met by the New Zealand Government alone there would be a massive rise in corporate and personal taxes to meet the bill."

IAG chief executive Jacki Johnson said: "The insinuation is unhelpful, but we don't want this to distract from our efforts, which are focused on our customers' claims."

Peter Rose, chief executive of AMI's claims management company, Southern Response, was unperturbed by Wintringham's comment. "When you read in the report it's quite appropriate what he said. The whole process of apportionment shifts money in both directions," he said. "I don't think he's alleging there are improper practices."

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