HOT TOPICS:   Home loan affordability  |  NZ$   | Migration                                          RESOURCES:    Economic calendar   |  Cashback incentives

Find your KiwiSaver fund

The comment stream

Reader poll

What was the main factor in National's thumping election victory?

Choices

Andrew Hooker previews the arrival of independent insurance assessors and reviews why the insurance industry fears their involvement in the claims process. Your experience?

Posted in Personal Finance

By Andrew Hooker*

A recent article considered the tactics employed by some insurance companies in an apparent attempt to monopolise experts such as quantity surveyors and engineers in the wake of the Christchurch earthquakes.

There is another phenomenon that the insurance companies would prefer to retain a monopoly on – that is insurance assessors.

New Zealand insurance companies employ specialist companies to assess and adjust insurance claims. Some of these companies proclaim that they are independent.

However almost without exception in New Zealand, insurance assessors work exclusively for (and are paid by) insurance companies. With the possible exception of specialist business interruption or loss of profit adjustors, insurance companies pretty much have the market cornered in New Zealand.

What that means is that when you make an insurance claim, the insurance assessor, retained and paid by the insurance company tells you what you’re entitled to, and there is little in the way of expert advice or assistance in putting your claim together.

You either retain a lawyer to advise you of your rights, or attempt to interpret the mine field of the insurance policy to make sure you are getting what you are entitled to.

And history has shown us that insurance companies don’t necessarily tell you about some of the things you are entitled to under your policy – you have to ask for them.

Public assessing services

In many other countries, there are specialist insurance assessors that work solely for the insured people. This is standard practice in the United States, where there is a large and professional “Public Assessing” service. People with insurance claims routinely retain a public assessor to ensure that they maximise the benefit of their insurance policy.

Indeed, the practice of public assessing is a controlled and regulated industry throughout many states within the US and insurance companies have learned to work with public assessors when considering insurance claims. Any attempt to shut out the public assessor or to undermine the insured’s right to retain independent assistance or advice in the claim can be seen as bad faith, and expose the insurer to significant damages.

The Christchurch earthquake has seen a number of public assessing organisations from the US set up shop in New Zealand. These organisations are largely staffed by highly experienced and knowledgeable insurance professionals whose sole role is to ensure that the insured people obtain the best benefit from their policy.

The New Zealand insurance industry is not impressed.

Insurers reaction

Anecdotal evidence is that representatives from these organisations have been told either directly or through their customers that anyone who retains them to assist with the claim will see their insurance claim go “to the bottom of the pile”.

Other examples include attempts by insurance companies to convince people to “dump” the public assessor that they have employed with the promise that they will get a better result on their claim if they deal directly with the insurance company.

Tactics such as these are likely to result in even more litigation when insurance companies attempt to interfere with legitimate commercial and contractual relationships.

It is likely that 2013 will see litigation in the Courts to test the rights of insureds to appoint their own independent representatives, and to prevent the insurance companies from deliberately undermining these experts.

A world renowned public assessing company - 'World Claim' - is one of the market leaders in New Zealand. Its representatives in New Zealand are passionate advocates for the rights of customers, and it would be fair to say the insurance companies they are dealing with are not impressed.

Representatives of the insurance companies, including their legal advisers, would like to suggest that this is because of what they perceive as a confrontational approach by World Claim.

Other people may simply see this as insurance companies pushing back against the inevitable tide of change – that insured people in New Zealand are learning to use whatever means possible to recover what they are entitled to under their policy.

It seems that the insurance industry, like King Canute, is trying to stop the tide of change. One thing people have learnt out of the Christchurch earthquakes is that insurance is a complicated and technical area and people need to obtain assistance and advice when pursuing their insurance claim.

For a long time in New Zealand, the insurance industry has held all the knowledge, retained all the experts, and expected its customers to take what they are given. Like the ever suffering orphan Oliver Twist, anyone who asks for more will be banished forever.

Many new lessons have been learned from the Christchurch insurance claims. One may get the impression that the insurance landscape in New Zealand is changed forever. Certainly insurance companies tell us that insurance will become more expensive.

Another change to come from the Christchurch experience will certainly be the birth of a new profession. Public Assessors will be here to stay.

And once the insurance companies, like their counterparts in the USA, learn to work with these advocates, instead of trying to banish them to oblivion the insurance industry will have come of age. Watch this space.

-------------------------------------------------------------

*Andrew Hooker practices as a specialist insurance lawyer in Albany on Auckland's North Shore. He is also director of Claims Information Specialists Ltd, an insurance information website.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

4 Comments

Excellent article. Very

Excellent article. Very timely. More needed.

 "insurance assessors work

 "insurance assessors work exclusively for (and are paid by) insurance companies."
Well and here I was thinking the current assessors were independent. A sceptical person would easily think that there is perhaps a commission in there if the numbers come down. Sceptical - what am I saying - of course the results will be affected.
What a cosy arrangement and an eye opener for a recent event. Family car parked on road side was wiped out along with a few others by a dozy defence driver in P North. Assessor valued the car without taking into account recent costs such as new transmission and engine overhaul. He came in thousands under what it had recently cost us. Not sure if World Claim is interested in these types of claims but I am putting the 0800 on speed dial.
 

In my experience regarding

In my experience regarding business interruption claims insurance companies are perfectly okay with the Insured utilising the services of an independently appointed claim preparer who deals with the insurance company's own appointed adjuster.
Insurance company appointed adjusters are not discouraged from finding cover where it is due - in other words they work strictly off the policy response.
In many cases the claim will cover the costs of the fully independent claim preparer and of course the Insurance company pays for the assessor whether in house or external.
Insurance contracts generally specify use of a mutually acceptable adjuster so the claimant can request someone else on the adjusting role.

Remember - You read it here

Remember - You read it here first from Andrew Hooker your resident eagle
 
Now read this
Insurers grind down Christchurch property owners
http://www.nbr.co.nz/article/insurers-grind-down-christchurch-property-owners-ch-134115
 
Partners at law firm, Wynn Williams, are warning that millions, possibly billions, are being lost from overseas reinsurers as worn down homeowners and commercial property owners accept settlements well below what they may be entitled to.
“Insurers talk about ramping up their construction rates and being on track. Their clients talk about delays leading to despair and depression.
“Some mention worry about the death of elderly property owners exhausted by perceived dishonesty, dubious tactics and double-dealing on the part of both EQC and insurers.

 
On several occasions in the past I have recommended that the 4 major banks should be charged an annual banking licence of $½ billion. Now it's time to recommend that same be charged to all the major insurers. If they want to do business here then pay the licence fee. Otherwise hop it.
 
Where is the FMA
Doesn't this sort of activity fall within their bailiwick?
 
Here's a perfect opportunity for the FMA to start threatening these outfits with massive $ multi-billion fines and then offering to allow them to settle with $ billion fines and no admission of wrong-doing. Thats how the SEC does it. Threats. Settlement. Threats. Settlement. How much in fines has AIG paid the SEC?
 
If not the FMA then who? Someone like it? Just who is responsible? Please dont say this is another one of those cracks-in-the-floor situations with no one responsible.
 
Any answers Gareth? Gareth? Gareth? Hello are you there Gareth?
Get that Feeley guy back in for another interview and put it to him