A Christchurch homeowner doubts the ICNZ claim of 'significant progress' when insurers' own websites show few completed repairs or rebuilds

A Christchurch homeowner doubts the ICNZ claim of 'significant progress' when insurers' own websites show few completed repairs or rebuilds

By Cam Preston*

On a large billboard on the busiest street in Christchurch, the IAG cartoon family smile down upon passing motorists.

The motorists' attention is focused on trying to dodge the ubiquitous road cones, but the family persists.

Day and night they ask "How many over-cap earthquake claims have we completed for Canterbury families?"

"2,233" they say.

Yeah Right.

IAG, for non Cantabrians, are more commonly known by the brands State Insurance, NZI and Lantern Insurance.

They, along with Southern Response, are the two companies with the largest exposure to over-cap (the most expensive) residential earthquake claims in Canterbury.

The reality, from IAG's own published data as at 2 September 2013, is 266 rebuilds complete, 99 repairs complete, and the balance as cash settlements.

A quick visit to Southern Response's website reveals a similar story, as at 31 August 2013, 117 rebuilds complete, 53 repairs complete.

The Insurance Council has recently labelled their progress as 'significant', but the most recent data on the 24,400 over-cap claims (as at 1 July 2013) shows only three per cent of the total have had their properties repaired or rebuilt:

Companies such as IAG and Southern Response have invented fantastical expressions for cash settlements such as "External Resolutions, House Re-installments, Customer Managed Rebuilds or Builds to Budget".

The common theme of all of them is agreement of the private insurers’ liability before construction begins, more commonly known as a 'Cash Settlement'. These types of settlements make up 30% of the total.

Alarmingly 18 per cent of customers are in dispute with their insurers.

While the insurers prefer the term "With settlement options offered - Undecided" after 3 years most of these customers will have crossed the threshold from 'undecided' to 'unhappy'.

The highest numbers of customers are those that have made the decision for their insurer to repair or rebuild their properties, but are still waiting, which sits at 33%, excluding those in dispute.

IAG and Southern Response use terms such as 'in construction' or "in design and documentation" to account for those in the queue waiting for their rebuild or repair.

The reality is hardly any have a tradesperson swinging a hammer at their properties. Southern Response has 285 properties where trades people are currently rebuilding or repairing.

IAG doesn’t disclose the number of rebuilds or repairs currently in progress.

Glancing at their somewhat aspirational forecasts for the coming years, the most optimistic reader would struggle to reconcile their performance to date with their 2013 forecast, let alone beyond:

There are technical obstacles to overcome.

The insurers have at various stages pointed to outstanding land zoning decisions, building consent delays and shared property issues.

However with every passing month these obstacles look more like delay tactics.

The reason for the delay tactics appears to be to effect more cash settlements.  Their success could be described as 'significant'.

However the way in which the insurers are going about this coupled with the ever present march of time and the hefty bills mounting from their "project managers" equates to  some nervous insurance executives out there.

Que the Spin Doctors.

While we should all know to never take notice of spin and concentrate on the road ahead, one can't help but wish that they too were part of that happy smiling cartoon family.

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Cameron Preston is a Christchurch homeowner who has longstanding unresolved quake insurance claims. This piece is in response to the recent Insurance Council claims of 'significant progress'.

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?

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20 Comments

I absolutely agree.  I still have properties that IAG have not yet inspected after 3 years and they still say I am in a queue.
 
It is an absolute disgrace.
 
And now a letter from EQC for a property that was in the Fletchers queue, that they are cash settling for $10,000 for two collapsed chimneys a broken foundation (over 10mm brand new crack) and twisted door and window frames.  
 
EQC are attempting fraud on a massive scale against insureds.  Criminal investigations should be made against the organisation.  How many houses are being illegally repaired.  We need some real investigations.  Bernard are you up for a challenge??

3 years in and we are battling to get a genuine assesment on a property in Chch done also. Have been offered repair value but own professionals advise should be total replacement (red zoned property so can't rebuild).
 
I keep requesting a structural assesment so they sent a loss adjustor out??? Now they just keep referring me to the loss adjustors notes. Since when was a loss adjustor qualified to do structural and geotechnical assesments? They are just trying to delay us until time runs out and we have to accept their repair value offer (at 30% of full replacement value). It's utterly despicable behaviour. I'd rather have no insurance than insure with Lantern / NZI / IAG ever again. Scum bags.

Japan is an old civilisation that has had repeated earthquakes and tsunamis yet only 10% of property owners had insurance in the last tsunami event.
 
Perhaps the Japanese have learnt insurance is not something you can rely on. In other words insurance does not cover the risk of natural disasters such as earthquakes.
 
Is the lesson from Christchurch is that insurance doesn't actually work for such big events?

I'm assuming you've taken the government offer for the land.  But if not you could always insist they repair - note red zoning doesn't limit their liabilities, and the CCC have already said that adequately prepared consents in the red zone could be granted, ie there is nothing preventing them from granting a consent.
 
Have you spoken with a decent lawyer?  Free legal advice is availale through the advisory service, although this may be not much help.  Perhaps you should give Grant Shand or Duncan Webb a call, they may be able to give you some direction on what you can do.
 
If you have a red zoned property that has no foundation damage you might have a battle, but if the house has sunk or is out of level, there is no question you will need new foundations, else the basis for red zoning was wrong.  Realistically the difference could be worth several hundred thousand dollars to you, I know of highly regarded engineers (PhD) who will be able to do a basic soil report for under $1500 based on known bore logs and a shallow on site penetrometer.
 
We have pretty much got to the point that litigation is the only way forward.  If you want any help  leave a reply or ask Bernard to send me your details.

Nice article, unfortunately it is repetive/ old news, regionally focused and will not get the hits here or any wider newspaper, easier to write about Auckland RE again...seems to be the only topic that appears to create a real pulse around here...interesting to see how traffic for this site is running after all the changes in staff this year...

interesting to see how traffic for this site is running after all the changes in staff this year...
 
I think the change in editorial policy to even more positive spin may have had greater impact.

So spin as opposed to truth and facts? surely you could sit and read National's or Labour's or any pollies facebook page for all the glow and feel good you want?
Personally I come here because the spin is light........
regards

Light, but pervasive?
 
You are on record here as to where you see the world's economy going. Did you find this morning's 90 at 9, especially the headline, clashing with that?
 
http://www.interest.co.nz/news/66284/90-seconds-9-am-japan-grows-impress...

I dont look at the day to day up and downs, its just noise IMHO, spin and smoke and mirrors at best.  I look at mult-month trends, what I see as the medium and long term fundimentals, I follow BH's view but twice as bad.
David C pops up on the BDI when its up one day...yet its back down the next....the trend over 12months is at best flat...8300 5 years ago, 1100 still today an 8th of what it was back then.....
Ive been saying its at best flat for 5 years and a big down is likely...V the likes of Roger who's been saying its getting better and here comes infaltion for 5 years. We have a dis-inflation trend, high and probably increasing unemployment here in NZ. The real US un-employment is more like 16% a staggering number, huge numbers of Americans claiming food stamps....Japans' demographics are awful plus its debt is huge and it has to start going offshore for that debt rollover as old japanese sell off that debt to live in retirement.
I dont think Ive done to badly, or more correctly the ppl I read have been.
and no I dont think we'll see any real improvement up....so yes Im perfectly happy to be on record saying I see a huge house price collapse and a 2nd Greater Depression, within 5 years.
Pick your poison.....gamble as you choose.
regards
 
 

I was also hinting at that..been away a few times this year and after returing to this site appears the drop off in comments and past regular contributors is very noticeable.
The opinion/comments in articles are becoming more mainstream..it reminds me of talk back radio.. it amazing when you drive around listening.. so many comments by the media are close to party political sound bites..it uncanny!! :-)

Two, three or more years ago the site provided a very good forum to share information and learn. And at the start of GFC we certainly had a lot to learn.
 
Since then the site has moved to a more mainstream media model - possibly for commercial reasons.
 
That doesn't mean that there weren't opportunities from moving in the other direction but that would have required a much more innovative model less dependent on news and advertising revenue.
 
I am still thinking about and discussing how such a model could work but so far without generating enough interest to get it started.    

I don;t agree with you Speckles as far as this being a regionally focused story. As we have been saying in ChCh for the last almost three years, what is happening here will happen anywhere else in NZ hit by a major event like we have been. The lack of regulation in the insurance sector is to blame for the IC's being able to delay delay and delay - that needs to be addressed by central Government - again not a regional issue.
 

Every property owner and investor should read this article.  

Why won't the Govt step in and sort this con job out?
Because the Govt  ( EQC) are , by and large, the problem.
The Govt has spent so much time and money on PR and misinfomation ,the rest of the country can be forgiven ,for thinking everythings sorted down here .

If IAG paid out everybody this year they would be busted broke and their overseas shareholders would be sue happy at their Directors. The aim of IAG is to delay and delay then pay.
I understand the mutually owned insurers (Companies owned by their policy holders) have settled all damages claims, which suggests to me that insurance companies owned by shareholders are not the best for managing large risks.
 

That's my understanding too DoMac. Pity the media don't want to know and the current government prefer companies rather than anything cooperative. Just Imagine if AMI had stayed a mutual, those policy holders would be so much better off now and the tax payer would have been $350 m to the good.

Seriously Dudes,
ALL the isurance compaies are insolvent....they are all a mini version of AMI. Unfortunately the Goverment has given  them a a clear NO to any bailout aka AMI "loan"....so they are only left with "Talk and Dodge"...until their new business coverage gives them a cashflow positive ability to settle claims like they should....
 
This can go on a few more years when either a new crisis close them all down or claimants just give up from trying......Or the ever hopeful scenerio when all things goes to normal....perhaps after two decades ???

AMI though didnt have enough re-insurance cover, all the others do (as far as I know).  Interesting that lots of "nasty" comments on here about how bad AMI were, yet they seem to have been paying up as well or better than the privately owned ones...
regards

Insolvent, maybe not yet, but given how AGW is going ie there will be more big claims I wonder how long it will be before they are, or stop offering re-insurance cover before they do....then the housing market(s) is buggered.....
regards

What a load of rubbish.
IAG and Vero are increasing profits and premiums and are smiling.  They had plenty of reinsurance, and have provisioned for Christchurch claim costs. The time the rebuild is taking to happen probably means that they can pay claims out of current cashflow. 
The current game is to burn claimants off and encourage them to take a cash payout rather than wait years for a rebuild, which is a much cheaper settlement for the insurer.