Southerly by David Haywood

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Southerly: Tower Insurance Have Some Bad News For You

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  • Yip Yip,

    Please don't get me wrong. I don't work in insurance and I don't agree with the government's solution because it leaves so many customers in the lurch.

    I'm stating the facts behind insurance. Earthquakes and other natural disasters are explicitly covered under insurance (with top up cover and out of scope cover). Government destruction is explicitly not. That this situation comes under the clause surprised me too but insurance companies have almost definitely had legal advice to clarify.

    I think if you can get your house repaired before September and then move the house then you should definitely do it. It would, however, have potential consequences with the government deal (will they pay for the land but not the house? I'm not sure). It would also be a slow process with insurance so you'd probably be better off paying for the repairs yourself and getting reimbursed by Tower otherwise I'd doubt it would be done in time.

    Christchurch • Since Jun 2011 • 6 posts Report Reply

  • Sacha, in reply to andin,

    Thursday announce, answer the questions, Friday it sinks in. Saturday, duck.

    You mean Thursday, journos after their noon pre-announcement lockup don't uncover this fast enough to ask any questions (well hidden so no surprise there). Instead they faithfully regurgitate the talking points about how good the deal is and what a wonderful man that John Key is.

    Friday, some read David's blog and do a little digging but make sure they don't credit him with breaking the story for them. Most still don't get that there's a story here.

    Sunday, Key flies the coop so the shit won't stick to him. Business as usual for the hollow men.

    Now, where's the organised political opposition? Who is acting in the interests of Christchurch homeowners rather than foreign-owned insurers and bankers?

    Ak • Since May 2008 • 19740 posts Report Reply

  • Che Tibby,

    is this YET ANOTHER example of corportations privatising profit, but socialising losses?

    i'm really starting to hate those guys.

    the back of an envelope • Since Nov 2006 • 2042 posts Report Reply

  • Sacha, in reply to Sacha,

    And another part of the jigsaw - Brownlee is determined to rebuild profitably on red-zoned land.

    Oops, I see Ian had already quoted another part of that story.

    Ak • Since May 2008 • 19740 posts Report Reply

  • Thomas Johnson,

    Some thoughts

    - Why the finger pointing at Brownlee/Key? I know most here hate the Nats, bu surely the government cannot take on an obligation to put every single resident/owner/business into the same situation as pre-quake. That would be ruinous. As it is they are paying out approximately 100k to each of the 5000 in the red-zone as a top up to the EQC cover.

    - Does any insurance company offer a no-strings replacement cover, and at what cost?

    - It may be that public/legal pressure force a change on Tower (and the others which seem likely to follow the same logic) which will benefit those currently making claims. However it may make future house insurance in ChCh impossible or extremely expensive. (heard someone say yesterday that they are ready to build a new house there, but the builder cannot get construction cover, and they cannot get house cover for when it is completed)

    (I don't work for an insurance company)

    Wellington • Since Oct 2007 • 98 posts Report Reply

  • andin, in reply to Sacha,

    Friday, some read David’s blog and do a little digging but make sure they don’t credit him with breaking the story for them. Most still don’t get that there’s a story here.

    Friday I was working, missed this. Thanks for setting me straight...or something.

    raglan • Since Mar 2007 • 1891 posts Report Reply

  • Hebe,

    More on my post 2 hours ago: I reckon orange zone owners should be wary. My friend's house in the previous post is orange zone, highly likely to be be reclassified red. Funny that the insurance company now wants to repair when he had definitely been in the rebuild class.

    I suspect all orange and white zoners told they are rebuilds will find the insurers "want to reassess them". And the reassessments will not happen until the land is deemed green or red.

    So that's the comparatively wealthy hill-dwellers (white zone) in limbo; and they have been hit hard with many, many destroyed houses. The shrieking of what the Govt would consider it's must-have voters will start ringing out across the muntlands within a month. Just in time for a party-vote hammering at the election?

    As for collusion among the insurance companies, the deal was stitched up with the reinsurers breathing down the Govt's necks; Brownlee said as much a week or so ago. They'll all be playing off the same song sheet. The only answer is the aggrieved getting together, hiring Mai Chen or someone equally as high-profile, and taking it through the courts. But even then Cera can basically do what it wants wherever it wants with the Minister's say-so.

    Christchurch • Since May 2011 • 2899 posts Report Reply

  • Hebe,

    Land cover will be binned for all of NZ soon.

    Christchurch • Since May 2011 • 2899 posts Report Reply

  • Sacha, in reply to andin,

    Friday I was working, missed this

    I'm just saying that the Press story published today was written yesterday. Haven't seen any other coverage. Was talking about journos; no reflection on the rest of us.

    Ak • Since May 2008 • 19740 posts Report Reply

  • Sacha, in reply to Hebe,

    can basically do what it wants wherever it wants with the Minister's say-so

    Change the Minister.

    Ak • Since May 2008 • 19740 posts Report Reply

  • Lucy Stewart, in reply to Yip Yip,

    I’m stating the facts behind insurance. Earthquakes and other natural disasters are explicitly covered under insurance (with top up cover and out of scope cover). Government destruction is explicitly not. That this situation comes under the clause surprised me too but insurance companies have almost definitely had legal advice to clarify.

    Sure, there's a technical argument that this is not explicitly covered and therefore the insurance companies are under no legal obligation to pay out. And there's probably plenty of lawyers willing to argue that.

    But this is clearly not what anyone, in good faith, would expect to come under "government destruction". People are being forced off their properties due to a government decision that entire suburbs are unrepairable after a natural disaster. That's not in anyone's expectation of "government destruction". If people with total replacement insurance aren't paying for it to cover this sort of situation, then what the fuck are they paying it for?

    You do understand why people are genuinely and reasonably angry, and why this is a massive betrayal of good faith? That just because something can be weaseled out under a technical loophole doesn't make it okay, or fair, or right?

    It would also be a slow process with insurance so you’d probably be better off paying for the repairs yourself and getting reimbursed by Tower otherwise I’d doubt it would be done in time.

    With all those huge piles of spare cash everyone in Christchurch has lying around right now, I suppose...

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • Danielle, in reply to Lucy Stewart,

    That just because something can be weaseled out under a technical loophole doesn’t make it okay, or fair, or right?

    Exactly. It boggles the mind: David and his family not only have to take this, but are supposed to be *understanding* about the "pressure-filled" - and yet, somehow, hugely money-saving - situation in which the insurance companies find themselves? I mean, just how brainwashed would they like us?

    Charo World. Cuchi-cuchi!… • Since Nov 2006 • 3828 posts Report Reply

  • Lucy Stewart, in reply to Danielle,

    It boggles the mind: David and his family not only have to take this, but are supposed to be *understanding* about the “pressure-filled” – and yet, somehow, hugely money-saving – situation in which the insurance companies find themselves?

    I've just spent fifteen minutes arguing with someone (IRL) who thinks that it's not really anyone's fault because corporations are beings with emergent properties and in any case their shareholders would sue them if they were nice, so you can't blame anyone specific for any of this, except the government for not legislating better. And, this is important, I have resisted the urge to throw things.

    By a very slight margin.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • chris,

    This brings to mind and has the potential to turn into the type of situation I've observed in Beijing where large areas slated for redevelopment have been all but entirely bulldozed save one building (or in some cases half an apartment building), the occupant of which has simply flatly refused to accept the developer's offer for their apartment.

    "over my dead body..." etc.

    In such cases desperation for relocation on the part of citizens works in the redeveloper's/ Government's favour, so delaying any announcement of these settlements is advantageous to their proposed soluxion....

    The NZ Government should ideally be doing everything in their power to preempt these kinds of adverse incidents and the potential costs.

    Mawkland • Since Jan 2010 • 1302 posts Report Reply

  • Bart Janssen, in reply to Thomas Johnson,

    That would be ruinous.

    Yes quite right. An insurance company offering cheaper and cheaper premiums to get more business ... and then ... when an event occurs that all those homeowners paid insurance precisely to cover themselves against, the insurance companies don't want to pay. It is ruinous for them AND IT SHOULD BE!

    None of the which should be any problem for the government. If an insurance company goes bankrupt because it managed it's business badly that is capitalism at work. Bad businesses should fail.

    But what have National done, they have caved in to pressure from the insurance companies to create a loophole so the insurance companies can avoid their responsibility.

    There was no requirement for the government (your representatives) to give the companies (mostly internationally owned) a loophole. But they did. Now start asking why?

    This is NOT about the insurance companies using a loophole it is about the National government of New Zealand creating the loophole for them to exploit.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • rcg25, in reply to Hebe,

    there's another potential problem with the orange/white zones: for any houses that would need to be rebuilt if green, the outcome would be much more favourable for insurers if the land turns out to be 'red'. hopefully the land assessments will be fully independent of the house repair/rebuild assessments, but what are the odds of that, when so much money is at stake and these decisions are made out of public view? i'm afraid that insurers will push for streets with higher proportions of rebuilds to be zoned red.

    Christchurch • Since Jun 2011 • 3 posts Report Reply

  • Lucy Stewart, in reply to Bart Janssen,

    This is NOT about the insurance companies using a loophole it is about the National government of New Zealand creating the loophole for them to exploit.

    It's about both. The government's failure to stop this is unacceptable, and they deserve blame. But someone(s) at the insurance company also made the decision to take this interpretation of the law, and I don't feel inclined to let them off just because Corporations Are Amoral Monoliths, you know?

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • stephen walker, in reply to Lucy Stewart,

    it is about the National government of New Zealand creating the loophole for them to exploit.

    yes.

    nagano • Since Nov 2006 • 645 posts Report Reply

  • Sacha, in reply to Lucy Stewart,

    I don't feel inclined to let them off

    That's fine, but please let's focus people's energies on the organisation most likely to produce a positive result here. The one that is supposedly accountable to voters.

    Ak • Since May 2008 • 19740 posts Report Reply

  • Hebe, in reply to Lucy Stewart,

    The local insurers have sod all to do with the terms. They are told how to call it all by their reinsurers; the faceless global money men. Christchurch and its home-owners are at the bottom of the food chain.

    Christchurch • Since May 2011 • 2899 posts Report Reply

  • BenWilson,

    Why the finger pointing at Brownlee/Key? I know most here hate the Nats, bu surely the government cannot take on an obligation to put every single resident/owner/business into the same situation as pre-quake. That would be ruinous.

    The government has immense power to make the insurance companies honor the deals they made. They could pass a law to that effect if they wanted to. It doesn't have to come out of the public purse, although that's not anywhere near as out of the question as the Nats have put it. A levy to rebuild Christchurch would hardly be that unpopular, especially considering it would be finite in term.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Surfwriter,

    When I was an agency creative director and, later, a freelance creative director and copywriter, I worked on quite a few insurance product projects. I used to joke that insurance companies put 50% of their efforts into selling policies and the other 50% into getting out of paying for claims. Sadly, that's not a joke in this case. Shame on Tower Insurance. I sure as hell wouldn't want to have one of their policies and will avoid them like the plague.

    Matapouri Bay, Northland • Since Jun 2011 • 1 posts Report Reply

  • Tasneem Gould,

    Hi David,

    I am exactly in the same position as you are. We have a house that has barely been damaged, probably not over $25000 to fix. But due to being in the red zone, we have to move. BNZ (mortgage and insurance both, via IAG) have indicated that they will not be doing replacement value for our house either.

    The good news is that PM John Key appears to be aware of the situation and is talking about it - see story here: http://www.odt.co.nz/news/national/166412/negotiations-not-easy-key

    He seems to be indicating that the current approach of the insurers is abhorrent to him also, so perhaps there is hope of govt intervention in our cases. I certainly hope so!

    Good luck to you, and if you ever find that you're having to resort to the legal system, I'll go with you. :)

    Christchurch • Since Jun 2011 • 2 posts Report Reply

  • Jeanette King,

    Hi Tasneem,

    I don't read that article the same way you have. It's about how and why Key went about organising the arrangement to offer to houseowners, that is, it seems to be talking past tense about possible insurance difficulties houseowners would have had if the govt hadn't come up with a package. I don't think Key's referring to this anomaly which David has raised post announcement. What do others think?

    Ōtautahi • Since Oct 2010 • 43 posts Report Reply

  • Sacha, in reply to Tasneem Gould,

    He seems to be indicating that the current approach of the insurers is abhorrent to him also, so perhaps there is hope of govt intervention in our cases.

    Key's speech to a National Party crowd in Queenstown is certainly interesting.

    However, on balance, the arrangement with insurers and EQC - where homeowners would get a fraction of the land and property value - was "totally unacceptable".

    He gave an example of a $600,000 property, of which $200,000 was land value.

    Following an earthquake like one in Christchurch, the homeowner may only get about $110,000 of the land value and, if there was 20% damage to the home, about $80,000 from the insurance company - even if the land had been written off.

    "They [the insurance company] say 'tough luck'. That's what we're faced with in Christchurch.

    "Would that be acceptable to the New Zealand public?

    "It's unacceptable to middle New Zealand ... and it's totally unacceptable if you live in those houses."

    However I reckon there will be no change of policy to match those sentiments without significant and well-organised pressure being applied.

    Ak • Since May 2008 • 19740 posts Report Reply

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