Natural disaster insurance scheme to reduce claims misery after disasters
Monday, 28 June 2021
The National Disaster Response insurance scheme, which will see EQC take a back seat on claims-handling after a natural disaster, begins on Wednesday, June 30✓.
The scheme was devised following Would EQC and the insurers do better, if a Canterbury quakes-sized natural disaster happened tomorrow?
* Insurers to take over EQC claims handling
* Government to change EQC laws to prevent communities suffering 'years of trauma'
' title=''>the misery caused to homeowners in the aftermath of the Christchurch earthquakes in 2010 and 2011 when they had to lodge claims with both EQC and their private insurers.
The scheme will mean that following a natural disaster, homeowners will only have to make claims to private insurers like IAG and Vero, which will act as agents for EQC.
After a natural disaster like an earthquake, landslip, volcanic eruption, or tsunami, the first $150,000✓ plus GST of damage to people's homes and land is provided by EQC, with private insurers covering the rest, up to the customer's sum insured.
**READ MORE:
* Insurers to take over EQC claims handling
* Government to change EQC laws to prevent communities suffering 'years of trauma'**
A forerunner of the scheme was successfully trialled after the Kaikōura earthquake in late 2016.
EQC chief executive Sid Miller said last year that 95 per cent of claims in the South Island town were resolved within 16 months, and less than 5 per cent of claims had to later be reopened.
Eight private insurance companies, representing more than 20 insurance brands, are part of the scheme: AA Insurance, Chubb, FMG, Ando (Hollard), IAG, MAS, Vero and Tower.
IAG believed the scheme would mean the insurance industry could now manage around 100,000 joint EQC/insurer claims a year.
Dean MacGregor, executive general manager for claims at IAG, which owns the State, AMI, NZI, Lumley and Lantern brands, said homeowners did not want to deal with multiple insurers after a natural disaster.
“IAG has worked closely with EQC, ICNZ and the broader insurance industry to drive these changes because our customers have told us time and again that dealing with multiple agencies to settle insurance claims adds complexity and pain points to the total recovery process,” he said.
“Private insurers can now act on behalf of EQC to process their claims, giving customers a single point of contact,” MacGregor said.
“We hope that most New Zealanders will never need to experience the new model first hand, but, if they do, it will help make their recovery experience as seamless as possible.”
People traumatised by the Canterbury earthquakes were further traumatised by the organisations meant to help them rebuild their homes and lives, Treasury officials told Prime Minister Jacinda Ardern late last year.
The “horror” many families suffered in their dealings with EQC and insurers must not be repeated should another massive natural disaster strike, Treasury told Ardern in a September cabinet paper.
In a report on the insurance handling in the aftermath of the Christchurch earthquakes, Dame Silvia Cartwright concluded assessors from both EQC and private insurers descended on people’s homes, creating an inefficient and maddening process, made worse by sometimes bullying, arrogant and incompetent EQC assessors.
But after the Kaikōura earthquake, EQC struck a deal with private insurers, which resulted in the claims being assessed only by the insurers, reducing cost, and complexity, Stevens says.
Cartwright said the deal was a genuine example of having learnt from the failures in Canterbury.
Tim Grafton, chief executive of the Insurance Council of New Zealand, said: “We know that in the event of a natural disaster customers need the best support they can get during what can be a very stressful time.
“The new collaborative partnership between EQC and insurers delivers a world-first scheme putting the customer at the heart of one of the most unique and responsive natural disaster response platforms globally,” he said.