Insurers are swatting away Labour Party accusations the insurance advice booklet they lobbied the Government to scrap could have seen Canterbury quake claimants receive higher settlements.
The Government decided not to publish an 82-page booklet, aimed at helping Canterbury homeowners through the cash settlement process, which the Ministry of Business, Innovation and Employment (MBIE) and the Canterbury Earthquake Recovery Authority (CERA) spent seven months putting together from February last year.
Insurers: “Booklet has the potential to add millions of dollars to the cost of the recovery”
An email dated July 9 2015, and released to the Labour Party under the Official Information Act, shows the Insurance Council of New Zealand (ICNZ) told government and insurance representatives involved in the project:
“Feedback to the ICNZ from other insurers suggest that the publication of the booklet in this format could be a step backward in the settlement process which will result in increasing delays in the recovery.
“The incorrect and inaccurate information outlined in Jimmy’s [Vero’s executive general manager of claims] email will confuse people and create expectations of benefits that are outside insurers’ policy wordings.
“Insurers are likely to come under pressure to reopen settlements to pay additional benefits such as contingency sums…
“This booklet has the potential to add millions of dollars to the cost of the recovery as customers seek payments above and beyond their policy benefits. A significant portion of this through Southern Response settlements, would come from the government purse.”
Labour’s Canterbury spokesperson, Megan Woods, says this shows publication of the booklet could have led to higher settlements.
Insurers clarify booklet would’ve costed insurers by causing delays and disputes, not higher claims payouts
The ICNZ disagrees. Its chief executive, Tim Grafton, told Interest.co.nz:
“The comments made about release of a generic cash settlement booklet adding millions to the cost of recovery referred to the delays and inevitable disputes that would result from customers believing that a government publication was advising them of entitlements that were not in accord with their actual insurance policies.
“The comments made by ICNZ that the “booklet had the potential to add millions of dollars to the cost of the recovery as customers seek payments above and beyond their policy benefits” refers to the additional costs to insurers of delays and disputes, and not to higher claims payouts for customers.”
Opposition: The Government’s bowing to pressure from big insurers
Woods has put the onus back on the Government, saying the Minister responsible for the Greater Christchurch Regeneration, Gerry Brownlee, on Wednesday “stood up in Parliament and swore black and blue that the Government’s controversial insurance advice booklet was scrapped because it was ‘useless’.
“But emails from the insurance industry to the government reveal warnings that the information would have cost ‘millions of dollars’ in higher settlements, including from Southern Response.
“Gerry Brownlee is trying to hide the fact that his Government bowed from pressure from big insurers worried about their bottom line, and is now trying to claim that a booklet the government spent seven months and hundreds of staff hours on contained no useful information.
“He’s having to resort to throwing five different government agencies work under the bus rather than admit his Government didn’t have the guts to stand up for local people in the face of pressure from the insurance companies.
“It’s simple: if this booklet was so useless, why were insurance companies warning of the impact it could have on the government purse?”
Government: “Certainly not apologising” for the booklet not being published
Asked by Woods whether he’d apologise to Cantabrians for “bowing to pressure and scrapping a booklet that would have aided them to get back on their feet and get a fair deal” during question time, Brownlee said:
“Given that the book took seven months to produce and was totally useless, I am certainly not apologising for it not being published.”
He adds: “At the start, insurance settlements in Christchurch were at 83 percent. By the time it had finished, they had risen to 93 percent. As of where we are at the present, those insurance settlements are at 96 percent.
“The book itself was considered by those who reviewed it to be extremely confusing and likely to be most unhelpful.”