It was an autumn Christchurch morning warm and blue skied enough to make even Scrooge’s spirit soar. Biking to work at the South Library was positively gleeful. Today’s ensemble: biking shorts, little pink floral t-shirt, pink Diesel trackies, a quick splash of makeup after a 2 minute shower. I felt great. Had a lovely breakfast before I went in, on top of the world.
I make the point about the clothes because this is now the corporate attire one wears to a meeting with the Mayor, the Councillors, the CEO, Chris Ryan (CEO of the Insurance Council), Karen Stevens (Insurance and Banking Ombudsman) and (gulp!) Paula Rebstock, Chair of the Insurance and Savings Ombudsman Commission – hope I have that title right – there were so many letters after so many names it’s entirely possible I have it wrong. My apologies to Ms Rebstock if that is the case – corrections by comment are welcome.)
Our briefing today was to get us better informed about the role of the Insurance Ombudsman’s office, and a primer on Insurance/Reinsurance/Future of the Insurance Market in Christchurch.
We learned that there are two relevant Ombudsman’s offices. EQC complaints go to the Parliamentary Ombudsman. Insurance and finance related complaints go the the Insurance and Banking Ombudsman. Their phone number is 0800-888-202: their website is www.iombudsman.org.nz
Have a good look at it. It will tell you in greater detail about the regulatory scheme that underpins our insurance companies. It will show you the many participating organisations (went from 50-1300 members last year).
The good news is that if you have a complaint about your insurance company and they participate in the scheme, there is a free process that you can work through. The other piece of good news is that although not all companies participate in this scheme, they have to participate in one and that website has links to the others.
If you have a broker, things are a little different. They’re not all under the schemes until July 1 (in Christchurch, April 1 the rest of the country).
It’s a great scheme. There is also clear cooperation between the EQC ombudsman and the Insurance Ombudsman. IF YOU HAVE PROBLEM WHERE EQC AND YOUR INSURER ARE AT CROSS PURPOSES – COMPLAIN TO BOTH OMBUDSMAN’S OFFICES. You do need to go through the internal dispute resolution processes first – but explore that website. It is very helpful and incredibly reassuring.
Karen stressed that you will only be covered for what you’re covered for, which might sounds obvious but unfortunately if your policy isn’t what you hoped it would be it is still your policy.
The ISO can deal with claims up to $200K or higher by agreement with the participating company – they are then bound to pay any sum found by the ombudsman. They handle domestic and small business claims – they are defined in legislation as having up to 19 employees and annual turnover/assets less than $1M (I don’t know if that’s an ‘and’ or an ‘and-or’). Full service, fire & general, disability, life., loss of income complaints.
Things like loss of rent and depopulation are high on their radar, but the complaints have yet to filter through. Karen told us they received only 2 formal complaints from the September 4 shake: this event could well be different, and they assured us that if there is such proven for the service there is scope to look at providing a Christchurch presence. Very reassuring.
An interesting discussion on “Broker Wordings”. My insurance background is better than many I think, but the world of the broker is mysterious indeed. Brokers are there to sell insurance. They are paid on commission. If you have a policy delivered by a broker, and it’s cheap, there may well be a reason why it’s cheap. Message is read the fine print, shop around.
Here’s the really really good news.
Reinsurance is basically insurance for the insurance industry. They pay hundreds of millions of dollars a year to offshore reinsurance companies to cover them for losses over and above their excess – it’s just what we do as domestic consumers but on a much bigger scale. There were very specific questions about the risk (there’s that word again) of any of the relevant reinsurers falling over, particularly after the events in Japan. Chris Ryan’s response (and I asked him if I could report what was discussed today so I’m not in breach of Chatham House rules) : “All large reinsurers have full scrutiny by the international marketplace. The chances of that are remote.”
We had a more detailed explanation of the nature of New Zealand resinsurers (you can look them up – Swiss RE, Munich RE, General RE) – they are all members of the NZ Insurance Council.
The other great news is that the forecast for the insurance market in Canterbury is that we will still be able to get it (there will be some caveats I think on earthquake prone unreinforced masonry buildings which is hardly surprising) and that the market is now freeing up. IF YOUR BROKER CAN’T GET YOU INSURANCE THERE ARE COMPANIES WHICH DO NOT DEAL WITH BROKERS. GO THERE. They are State, Tower, AMI, AA. AMI, by the way, is in good shape. The guarantee scheme put in place by the government is to stand behind them – it’s because there were two events, that is all most companies are reinsured for – it is in case we get a third major event that their excess would be a problem. It’s a complex industry, the short report is it’s fine, panic slowly, life is getting back to normal.
Similarly, previous comments around the huge increase in premiums may be somewhat premature. While we can expect some increase, affordability for more Mum and Dads shouldn’t be such an issue. And even if we end up with some people being uninsured for earthquake risk, that is common internationally and there already mortgage models (California for example) where buying and selling is not a problem.
This is great news for those of us who own property, and particularly for those folk who might want to buy or sell. Chris Ryan’s advice: “include a clause in your sales and purchase agreement that specifically addresses ‘subject to satisfactory insurance being obtained'” – (that’s not a direct quote, I know I missed a word in there, but your real estate professional – and you need one more than ever at the moment, not just when you’re selling but when you’re buying too) should be able to figure that one out.
There is a clear vibe from the three high powered people we spoke to this morning that the international reinsurance market is not moving away from underwriting Canterbury. And why would they? Chris Ryan again: “Insurers don’t want to NOT have a market.”
The drive to recovery is genuine, profound and the aims are about practical, timely, swift payments and realistic settlements.
I came away from that briefing today feeling more than ever that we are so well supported and so well cared for nationally and internationally that we will have to work hard to snatch defeat from the jaws of victory after our catastrophe.
Christchurch is a gold rush town, make no mistake about it. While businesses will change, and wealth will change hands, and some people will lose a lot of their personal balance sheets, many others will begin to thrive and prosper. We are at the tipping point of a new market economy. If clinically I put the losses (and they are many and massive and personal and cultural) on one side of the balance sheet, on the other I put hope and opportunity and a future for our kids and our families. We will make it through.
Please spread the word to those you know about the insurance ombudsman’s service. Please spread the word that insurers are not abandoning us. Please too if you can spread the word that the staff at your insurance company and at EQC are people who are just like us. Many of them are in our families. They’re doing the best they can too. Let’s care for them as well.
So, having written this up, I’m now going to excavate my desk. There are some letters and agendas to read, bills to pay, and then the boys and Pepper and I are off to descend upon the wilds of Montreal Street. I’m going to show Therese Minehan what the devil she taught did spawn. (Probably the first time teenage boys have desecrated her lair!) And then to Mum and Dad’s for his 81st birthday dinner. I suspect there may well be further pikelets. Pepper will be very pleased. She’s quite partial to them.
Spoilt? Our pup?
No more than I was:)