Insurers grind down Christchurch property owners

Insurers are delaying, obfuscating and short-changing Christchurch earthquake survivors

Residential property owners in Christchurch are becoming increasingly embittered and cynical regarding claims that the rebuild is ramping up.

David Stringer of InsuranceWatch says the responses to the latest survey by his organisation show repairs continue to lag behind insurers’ assurances.

The InsuranceWatch results come as Lumley is the latest insurer to claim repairs will be completed by October 2015.

And partners at law firm, Wynn Williams, are warning that millions of dollars, are being lost from overseas reinsurers as worn down homeowners and commercial property owners accept settlements well below what they may be entitled to.

InsuranceWatch’s Mr Stringer says that in May, IAG told customers at a public meeting they would be completing 85 rebuilds a month within six months.

“IAG’s November monthly tally showed just four rebuilds for the entire group – State, NZI, Lantern and the banks,” Mr Stringer says.

He holds some hope for improvement, having been told by IAG that, since the public release of those figures, the 2012 tally for completed rebuilds has risen from 49 to 102.

“People are moving through the process, but it has been very very slow so far. We look forward to monitoring whether this increased pace on the part of IAG continues into the New Year. They’ve still got a way to go to hit that promised 85 rebuilds per month.”

Mr Stringer estimates fewer than 300 houses have been replaced in 2012, and also points out the bulk of these have been the easy option of new houses on new sections.

People looking to rebuild on their TC3-zoned land or in the hill areas are still waiting to start the lengthy process.

“Insurers talk about ramping up their construction rates and being on track. Their clients talk about delays leading to despair and depression.

“Some mention worry about another ‘d’ outcome – the death of elderly property owners exhausted by perceived dishonesty, dubious tactics and double-dealing on the part of both EQC and insurers.

“Some 80% of InsuranceWatch’s latest respondents have experienced delays of some sort. Many provided heart-wrenching descriptions of being refused information, feeling coerced into a forced choice, or falling into a no-man’s-land between EQC and their insurer.  

“The latest InsuranceWatch survey shows that 40% of its respondents plan to shift insurers as soon as they are able to. With the likes of IAG and Vero polling poorly across all aspects of customer service, this could well represent a major shift in the insurance market. Many frustrated customers are talking with friends and relatives across the country and encouraging them to shift away from the larger insurers.

“Surprisingly, one of the smaller insurers, Lumley, looks to have matched pace with the big boys, completing 63 new houses this year, which represents around 15% of their total expected rebuilds completed already,”  Mr Stringer says.

Lumley also has 106 rebuilds under construction. More than 100 major repairs are underway, while hundreds of emergency repairs and paths/driveways/fences have been completed. The company has settled 50% of all its domestic earthquake claims.

AMI off-shoot Southern Response built 42 new homes as of November 2, representing 2% of their expected rebuild.

“With 32% of the Christchurch market, and only four rebuilds completed in November and another five expected in December, the company is going to need to up its rate significantly or have a large proportion of its clients bail out with a cash settlement. Tower expects to have 18 rebuilds by Christmas, up from five at the beginning of July.”

One InsuranceWatch statistician has made a close study of his home suburb of Mt Pleasant. He calculates that with a conservative estimate of 400 houses set for rebuild there, getting the place back to pre-quake housing levels is going to take a while. At 100 concurrent reconstructions, he estimates 2018 would be a realistic completion date.

However, an InsuranceWatch project manager says the area could probably support a construction rate of only 50 houses at any one time, because of geographical and transportation limitations.

“Any which way you dice it, residential property owners are in for a long haul unless insurance companies really do get their act together,” Mr Stringer says.

“We would love to be proved wrong.

Mr Stringer says a recent “puff piece” issued by the Insurance Council of New Zealand concludes that “insurers can be proud of their contribution to the rebuild of Christchurch”.

“With their current record of broken promises, missed targets, desperate clients and woefully inadequate rebuild numbers, InsuranceWatch sees very little for reason for them to be proud of their performance over the past two years,” Mr Stringer says.

Meanwhile, community leader Reverend Mike Coleman is calling on people to financially support elderly couple, Matt and Valerie O'Laughlin, who are battling Tower Insurance over assessing homes in the red zone as repairs.

“This has been one of the most disgraceful policies of nearly every insurance company and the deal struck with the Government. It has never been challenged in court. Actually to date no decisions on any zoning or earthquake issues affecting the most vulnerable have been taken to the High Court. No one can afford it not even this couple so we need people to make contributions,” Mr Coleman says.