Hutt homeowner's 'insurance nightmare'

Thursday, 14 March 2019

Wellington property owners and insurers are still dealing with the aftermath of the 2016 earthquakes - tenants have moved out of Reading Cinema's building on Courtenay Place due to risk.

Lower Hutt resident Gary Paddison says he found insurance giant IAG a 'nightmare' to deal with over his claim from the Kaikoura earthquakes.

'Each time I've challenged them I've won but they don't seem to have a clear system for working though claims.

IAG has reassessed the risk profile of Wellington houses.

'Initially they sent out someone from a franchised assessment firm and I never heard back for months because of a mistake about our address.'

**READ MORE:

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* Tower insurance premiums put the squeeze on homeowners**

Paddison said he was eventually visited by a competent quantity surveyor, although there were disagreements about how much damage was from existing subsidence.

In the end he negotiated an amount for repair that was quadruple what IAG initially offered, although he remains uneasy about the recommended repair – resin would be injected into the ground to raise and level a corner of the house.

IAG has been in the news this week as it refused to issue new contents and house policies to some would-be customers in Wellington.

Insurance broker Stewart Rankin of Amicus said insurers were reassessing Wellington because of the recent earthquakes and how it fitted their risk and exposure in New Zealand.

'They are concerned about geographical spread and the risk. Remember what happened to AMI in 2011 when it had a huge amount of risk in the Canterbury market, he said.

AMI collapsed under the weight of earthquake-related insurance claims and was ultimately sold to IAG, excluding the earthquake liabilities which fell to the government.

'The insurance market is also cyclical and a rise in premium prices creates renewed interest from overseas reinsurers who will see greater opportunity eventually,' Rankin said.

He said there were alternatives as new overseas-backed insurers came into the market or Lloyds-backed syndicates provided cover – generally for higher risk properties at higher cost.

Some of them with New Zealand offices included Youi, and Ando backed by Hollard and Lloyds, while Rosser was another overseas underwriter.

Christchurch real estate agent Heather Chick said the experience in that city post-quakes showed people might still be able to get cover but they often had to shop around.

'Insurance is available from overseas, although prices are slightly higher,'

Some house sales had fallen through because of difficulties obtaining insurance, especially when vendors had failed to keep receipts of work, and were in liquefaction-prone areas, Chick said.

An adviser at The Mortgage Girls, Elyce Maxwell, said city council flood zoning had become a bigger issue in Christchurch recently compared with the earthquake risk of five years ago.

'A lot of people are getting access to to overseas insurers through their brokers. Generally we can find some insurance.

'But you have to provide builder's and engineer's reports. You can't expect to just sign over to an existing provider when you buy. A lot of people think it will be easier than it is,' Maxwell said.

IAG's recent announcements about becoming more choosy over accepting policies from new Wellington clients follows earlier warnings that customers in areas at higher risk of natural hazards would be hit with average increases in their premiums of $91 from its subsidiary brands AMI and State.

Those areas include parts of Whakatāne District, Hawke's Bay, Wairarapa, Greater Wellington, Marlborough, the West Coast, Kaikōura, Waimakariri District and Dunedin.

Insurance Brokers of New Zealand chief executive, Gary Young, said insurers were looking more closely at their exposure to Wellington.

'Commercial property has always been rated according to particular risks associated with the building whereas residential insurance has traditionally cost the same across New Zealand.

'They're now starting to change that and look at specific risk for houses. It's the same with cars where they look at specific risks and price accordingly,' Young said.

Advanced Mortgage & Insurance broker Shane Blummont said his company dealt with several insurers and some would provide cover where others wouldn't depending on the risk profile they had adopted.

Blummont said that ultimately it was government intervention, particularly bailing out AMI, that had 'saved' Christchurch after the earthquakes.

The New Zealand business division of Australian-owned IAG reported a 'significantly higher insurance profit of $193m' for the second half of last year from an increase in premiums in consumers and business cover, plus a reduction in large claims. It expected outstanding claims top take years to resolve given their 'complexity'.

Tower, which has raised premiums in Christchurch in favour of targeting the Auckland market reported a $6.7m loss for the year ending September 2018. It anticipates a return to after tax profit of $22m this year.