Vero wants EQC role radically reduced

The government and EQC’s role in disaster insurance should be radically reduced, Vero chief executive Gary Dransfield says.

He gave this message to a Trans Tasman Business Circle leaders' meeting in Wellington today.

“Given the government’s commitment to a balanced budget and debt reduction, Vero questions whether it is sensible to operate a fully resourced and funded public insurance agency with the sole mandate of managing claims after a major natural hazard disaster.

“I believe there are a number of different models that should be considered for private insurer and government involvement in earthquake insurance.

“Some could result in a substantially reduced level of Crown involvement in the provision and administration of general insurance, including no involvement in claims management.

“Others could have a changed level of Crown and private insurer funding.

“For example, private insurers could write earthquake insurance up to a set maximum amount and the Crown could act as a virtual reinsurer and meet the costs of claims above a set cap.”

Mr Dransfield emphasised the complications in EQC interacting with private insurers to manage claims.

Vero plans to model to insurers and the Crown the costs of a range of options that are alternatives to the present hybrid approach, he says.

A spokesman for info@InsuranceWatch.org.nz, David Stringer, says he would like Mr Dransfield to be more specific about alternatives.

Private insurers had benefited by about $500 million from last year’s High Court ruling on apportionment – how much private insurers should pay versus the government/EQC.

He says EQC should not be involved in contents insurance but there was a level of protection in having it as the “first insurer” in cases of disaster.

“If EQC was scrapped, or its role vastly reduced, would private insurers offer any disaster protection at all?” Mr Stringer says.

“They might just say it is no longer available."

c.hutch@clear.net.nz

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13 Comments & Questions

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Mr Hutching, you have the potential for the worthwhile stirring up a hornet's nest regarding Mr Dransfield's kite flying.
The fact that EQC, in the eyes of many, is an unmitigated disaster run and employing staff and consultants I happily label 'unprintable'. I also consider the private insurers to be deceitful and happy for the waters to be muddied, taking any opportunity to wriggle out of policy obligations and, worse, increasing premiums to a level that they would have us believe is necessary, despite them never admitting that their past actuaries surely already calculated the odds. More likely Vero and others just hate paying out and want to re-top up reserves double quick time. Frankly, anyone from the insurance industry with ideas should suffer extraordinary scrutiny. I cannot trust any of them.

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Problem is Insurance companies world wide invest the float and dont have the money on hand to pay out at a time of need just look at chch they are purposely delays to enable the insurance companies to roll over investments.... change the laws around insurers so they have to have at least 75% of the liablities on hand to pay out within X number of days then they wouldnt be interested

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Isn't that the reason the EQC should become the interim insurance industry for NZ, i.e. we 'nationalise' (that dreaded word) the problems we Kiwis have with the insurance industry globally for the next two decades.
They want us to pay from scratch for anything that gets dribbled out over 15 years to sort ChCh and NZ out.
So bite the bullet, build reserves and give the industry a big wake-up. And then open it up again.

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Great idea so long as we can drop kick all the Eqc troughers, bullies and drones in the process and start afresh with good talent.

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Anonymous,
can you prove your comments re purposeful delays?
isnt hiding behind Anonymous a bit like saying what you like as the oppostion in parliament ? you wont be held to account..

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I dont have to prove anything... the actions of the insurers speak for themselves. you should investigate the industry a little more i think.

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Strewth Paul you need to get out more.
There is a tsunami of complaint out there and you will still see it on 'Fair Go' in years to come. Trouble with insurers they know that eventually people just get worn out and give up. I bet they factor that into their payout strategy. BNZ Insurance is proof of how low they can be.

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As someone insured by Vero I can confirm they are not much better than EQC. After having an assessment done by Vero in April last year - a good effort, but no action since then, verbally told we would be a rebuild, whilst EQC say under cap?? - and no action by Vero to challenge EQC. I expect there are dozens of people in the same boat & no incentive by insurance companies or EQC to get things sorted & move on.
Its a shambles all round. I dont trust any of them.

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Vero has consistently been judged worst performing insurer with respect to the EQ response in surveys held within and without the industry. To wave Vero's tarred brush over the rest of the industry is not a fair representation.

Dransfield is right, EQC does need a make over but that is a different issue to how well the private insurers have responded.

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My home is quake damaged. No repair. No help from EQC. Around me people who are over cap are getting their places fixed by their insurers. Nothing with mine. I want the option of opting out of EQC.
Or have EQC only cover land damage costs with the EQC levy proportional to the land value covered. EQC is a total disaster in Christchurch.

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Add QBE to this as well. How about the NBR conducting a survey of what number of claims have been settled aginst those lodged by company - lets name and shame if neccsary or else prove what Paul Carrick is alluding to that the insurers are all warm and fuzzy and playing fair - not! Just had a friend tell me he has just paid $950 in AKL (Eastern suburbs) for full replacent policy on a home worth M$1.6 and I have just had a bill of just over $1000 for a flat in Hereford Street worth $185K with AMI -

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Surveys are available at info@InsuranceWatch.org

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Goodness me, the ignorance and myths just keep going unanswered.. The reason insurers cant settle claims should be well known to anyone understanding the complexities of multiple events and havinbg EQC argueing about hoiw much they are responsible for, for each event. Insurers can also not settle claims where the land is not fit to rebuild on and thye dont insure tha land. Insurers have an absolute incentive to settle quickly as the longer they delay, the higher the cost of reapirs so why would they delay. And dont kid yourselves that they benefit from investment income while they dont pay. The offshore reinsurers hold most of the money and thus investment income which does not help the local insurer trying to manage and settle the claims with their customers. Why would amnyone be so foolish to believe that insurers gain from delaying settlement. The mis information demonstarted by these comments is just awful.

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