Pay up or pay back - and with interest

19:53, Mar 22 2014
deborah coddington
Columnist Deborah Coddington.

The delays and buck-passing over Christchurch insurance must stop.

If we prang our cars, lose something valuable, or - heaven forbid - turn for home and find the house on fire, one of our first thoughts is, "Are the insurance premiums up to date?"

Because if they've lapsed, there probably won't be compensation. We can plead, argue, throw a tantrum but that insurance clerk will point to the fine print and walk away. Tough cracker, lady. In future, pay your bills.

So there is no valid reason, legal or moral, why thousands of Christchurch people and firms who've honoured their insurance contracts are still being stuffed around after the February 2011 earthquake. One corporate has taken their insurer all the way to the Supreme Court and the Port of Lyttelton resorted to mediation.

Of equal concern is the way residential customers are being treated by Southern Response - formerly AMI. Out of 6765 claims, only 291 have been settled - 111 repairs and 180 rebuilds. Compare that with Japan in the same time since their tsunami where 30,000 new houses have been built. Southern Response clients are so angry they've formed a support- slash-protest group called Southern No Response, and some are thinking of class action.

But here's the problem. Southern Response is no longer an insurance company. Under the Insurance (Prudential Supervision) Act 2010 insurance companies, to operate in New Zealand, must be licensed and regulated by the Reserve Bank, which keeps a register. But according to this register Southern Response's licence was cancelled in June 2012. It then became a Crown Entity and was declared a company "not carrying on the business of insurance".


So where does the supervision come from? Southern may not be issuing new policies, in that it's running out its work - albeit sloth- like - but it still operates as a business. It has a chief executive, Peter Rose, and a board of directors. So to whom is Southern accountable? Everyone and no-one - the Board, Treasury, independent auditors Deloittes, Parliament.

Rose reckons to the taxpayers - that's his excuse for the tardy payouts.

Nonsense. A private insurance company can't refuse to compensate policy holders because its shareholders are demanding dividends.

Rose and his directors clearly don't understand they have a primary obligation to honour contracts with the insured as quickly as practicable.

This is scandalous and shameful behaviour, and EQC is no better assessing and reassessing elderly people living out of boxes. These policy holders who've been through major trauma have done nothing wrong.

Last week I met a Chicago lawyer staying in Christchurch watching these insurance cases unfold. She is aghast at what our insurers are getting away with.

Why do they? Because they can, she reckons. In the USA regulations are much tighter. She sees our guys wearing people down until, fed up, they'll accept crumbs under a settlement.

In 1931 when the Napier earthquake struck there was little earthquake insurance but two no- nonsense guys took charge and rebuilt that city in two years. The region recovered rapidly because people's spirits weren't crushed.

Christchurch people shouldn't be ground down like this. Backsides need kicking - EQC, Southern Response, Treasury, Deloittes, Parliament and Cera's boss who faffs around with pointless PR surveys on happiness.

And if insurance companies or "Crown Entities" won't compensate, they should give back - with interest - all premiums they've dishonestly claimed over the years.

Sunday Star Times