1. Minimisation

2. Policy vs policy

3. Confusion

4. Public Perception

5. The Wild West

6. The Dryer & the Deep Freeze

7. Experts

8. Regulatory Capture

9. Top 10 Tips

Public Insurer = EQC = EQC Act

Private Insurer = State, AMI, BNZ, ASB, Tower, Westpac, Lumley, FMG, MAS = Private Insurance Policy

Both are INSURERS

1. MINIMISATION

Loss Reserve–the name of the game is

get claim settled at or below your Loss Reserve

“What I do know is that we can expect 90% of claims to be

under the EQC’s $100,000 cap”

Tim Grafton, Insurance Council of NZ3 December 2016

2. Policy/Act vs policy

Insurers have policies that minimise your entitlements under

the Insurance Policy/Act

The lesson insurers learnt from Christchurch was ‘get in, assess and settle quickly

and get out’ before folks start understanding their

actual entitlements

= MOU

MOU Clause 3:

“Acting in Accordance with

the EQC Act”

“3.1 In this MOU the phase “in accordance with the EQC Act” and similar references means in accordance with the EQC

Act (Policy) as interpreted by EQC (policy) and notified to

the relevant Insurer”

MOU Clause 10:

“EQC policies”

“10.1 EQC will provide Insurers with policies as to how it

applies the EQC Act (Policy) and Insurers are entitled to

rely on such policies (as updated and notified to the

Insurers in writing from time to time)”

“No policies, as described in clause 10.1 of the Memorandum of Understanding Relating to Kaikoura, exist at this time. Accordingly, your request for this information is refused under section 18(e) of the Official Information Act: that the document alleged to contain the information does not exist”

EQC OIA response 1 February 2017

Your Private Insurer is just acting as an agent for your Public Insurer for damage less than $100,000.

If you are having trouble with your initial assessment – go straight to EQC – they are the ones you have a Policy with.

3. CONFUSION

INDEMNITY COVER VS. REPLACEMENT

COVER

INDEMNITY:“An indemnity policy puts you back in the same financial position you were in prior to the loss occurring, so that you are no better or worse off than you were immediately before the loss”

REPLACEMENT:“This is a policy under which an insurance company will replace a lost or destroyed item with a new one, or repair the item so it is asnew as practically possible”

EQC Dwelling Cover is

REPLACEMENT COVER (‘as new’

not ‘same as’)

“Minor repair costs very rapidly escalate beyond the

EQC residential building cap of $100,000 plus GST”

EQC’s Engineers – Tonkin & Taylor – 1st Report dated October 2010

“Kaikoura's worst-hit residents fear their decimated land may also be written off, and the Earthquake Commission (EQC) is yet to determine how it will settle the region's land claims”

ChCh Press 17 November 2016

4. PUBLIC PERCEPTION

“Claims were settled to standards of individual and overall fairness perceived as acceptable by the public”EQC Review May 2009

5. THE WILD WEST

- Fair Insurance Code

- Insurance and Financial Services Ombudsman Ltd

- Financial Services Complaints Ltd

- Breakthrough Services

- Residential Advisory Service

6. THE DRYER & THE DEEP

FREEZE

GATE 1 = INDENTIFY, AGREE AND DOCUMENT DAMAGE CAUSED BY EQTHEN

GATE 2 = AGREE METHODTO REPAIR OR REPLACE

7. EXPERTS

“10.9 Engineering Services…Any engineering services procured by

an Insurer for the purposes of assessing or reaching a Settlement decision must not be provided by a person or a firm that EQC has advised the relevant insurer that

EQC does not wish to obtain services from”

8. REGULATORY CAPTURE

“In Policy/Act Resolution” vs

“External Resolution”

In Policy/Act:1. Payment of Cash Equivalent reinstatement costs “As incurred”?; or

2. EQC/Insurer Managed Reinstatement “Reasonably Sufficient”?

3. Indemnity Cash Payment

External Resolution:1. One off negotiated cash payment to go away

In Policy/Act: (20%)1. Payment of Cash Equivalent reinstatement costs “As incurred”?; or

2. EQC/Insurer Managed Reinstatement “Reasonably Sufficient”?

3. Indemnity Cash Payment

External Resolution: (80%)1. One off negotiated cash payment to go away

“Before the quakes everyone wanted to avoid

a building consent, now that EQC and insurers are

paying everyone wants one”

TOP 10 TIPS:1. If their lips are moving then they are lying to you. It’s not personal – its business. Get it in unequivocal writting (no might’s, maybe’s, if’s or but’s)

2. Pick on the big issues, these are the most likely to move their pre-determined Loss Reserve.

TOP 10 TIPS:3. Understand your Insurance Policy/EQC Act and then ask for and understand their policies on interpretation of the Policy/EQC Act – they can be very wrong and tend to make and change policies on the fly!

4. In my experience don’t step out of “Policy” until the last minute, your stated intentions mean a lot.

TOP 10 TIPS:5. Figure our your settlement strategy as soon as you can, this isn’t their first rodeo, but it will be yours.

6. Public perception is everything to the industry, use the media as a community

TOP 10 TIPS:7. Don’t give them control of experts and experts instructions, or the Council!

8. Treat “free dispute resolution services” with some caution.

9. Decide early on if you have it in you to withstand the Dryer – sometimes hanging out to dry can be less painful and you get the same result!

10. IT’S UP TO

YOU!