Southerly: Tower Insurance Have Some Bad News For You
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David my heart goes out to you and everyone in Christchurch..
To preserve the “heritage character” of the city, I would have thought the Govt and Territorial Authorities would have factored into the equation/scheme a capacity to re-locate older repairable dwellings and building of architectural merit to a suitable “new” location – the creation of new heritage suburb or similar type of projects.
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rcg25, in reply to
I don't understand why the reinsurers would be able to threaten legal action against the ChCh council. They could have complained about the land decisions at the time, but instead were happy to have insurance firms sell full replacement policies. Doesn't seem right for them to complain about this now.
They could threaten not to make insurance available in the future, and perhaps this persuaded Key & Brownlee to cut a deal. But in this case the government is showing a severe lack of vision. Why do we have to be beholden to overseas money men? Why can't NZ provide insurance as a public utility for its own people? EQC could be expanded to provide full replacement cover, and disaster insurance could be run as a public utility for NZers. We need the equivalent of kiwibank for insurance!
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Sacha, in reply to
I don't understand why the reinsurers would be able to threaten legal action against the ChCh council.
Seems they were doing so (see the Fran O'Sullivan quote in my earlier post). Alleged regulatory incompetence is enough to be starting with if it means potentially saving 9-figure payouts. Worth a crack.
They could threaten not to make insurance available in the future
Seems they're already doing that too. Must be quite some negotiator, that Brownlee chap.
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Sacha, in reply to
EQC could be expanded to provide full replacement cover
Best suggestion I've seen is to make it part of the rates system, so all properties are covered.
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Sacha, in reply to
re-locate older repairable dwellings and building of architectural merit to a suitable “new” location – the creation of new heritage suburb
Great idea.
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Sorry to hear that David! I'm with Tower too but I think, it's time to start looking at other companies!
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DexterX, in reply to
The liability would likely result from the issue of permits/consents to develop the land which was found to be unstable - duty of care blah, blah, blah..
About 30 years ago I acted for a family group in a situation where a corner of the new home they had built had sunk. The engineers report and investigation found that the section sold was poorly compacted and hadn’t settled (it might have even been a council dump).
The settlement that was reached was that the council met the cost of remediation of the land and the repairs to fix the house and the client’s costs to the date of completion of repair and in consideration of this the client then indemnified the Council from further loss/damage.
The Council was one of the lesser Auckland Councils and it was a “time” where setting things right and looking after people were paramount in local government and public service.
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Moving forward.....I HATE that phrase.
This event and subsequent Govt "relief" will have a significant influence on our perceived values and the real value of our property (GVs). I am aware of only a very few people who have taken the course of asking the local council (and QVNZ) to revalue their property because they thought it was too low. I have heard of many who have asked the council to revalue their property becasue they thought it was too high. I have to say, there were more of them than the other. I alluded to this a few days ago but after a cuppla days of thinking it still comes back to haunt.
The consequences of acccepting low GVs is on show down south. We all (and I have never queried our valuation either!) accepted it because invariably we did not want the rates bill to be bigger. Councils have been voted in and out for the princely and usually miserly percentage points of rate increases they wanted to cut or propose.
It will make us all rethink what we have let ourselves in for. I am making a very big assumption that when Wellington goes, Gerry and and the Placemakers will front up similarly. And IF NZ Inc can afford another hit if it happens!
There are now distinct advantages to crank the value of your home to the hilt. I think that it might be advantageous for selling reasons as well. Imagine buying a property at $50+ below GV. What a bargain!!!!! Further, the increase in rates for a $50K+ house over what it might have been may in fact be cheap insurance because I suspect the increase in rates will take a few decades to cut out the $50+ in insurance return if you get hit.
Just thinking out loud........
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Sacha, in reply to
And IF NZ Inc can afford another hit if it happens!
To be fair, that would have been part of the recent negotiations too. I don't envy the government there (just wish they were better).
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I don’t understand why the reinsurers would be able to threaten legal action against the ChCh council.
It's what they do, that's why...
From PWC (pdf)The Council on Litigation Management
(www.litmgmt.org) estimates that
annual outside legal expense, inclusive
of claims, is in excess of $30 billion for
their member companies alone. Some
portion of this expense is a necessary
and integral cost of doing business
because it provides, among other
things, a mechanism for dispute
resolution and protection against
unjust enrichment.And we don't want none of that "unjust enrichment" do we?
$30 Billion eh? just on fighting claims, the cost of compensating the victims of the 'quakes pales into insignificance against the numbers these vultures deal with.
$3.3 trillion back in 2004 with an average growth rate of around 10% per anumTo illustrate the steady growth in the global insurance industry in recent times, in 2004, global insurance premiums grew by 9.7% to reach $3.3 trillion (as against the 11.7% growth in 2003). While life insurance premiums grew by 9.8% during the year due to rising demand for annuity and pension products, non-life insurance premiums grew by 9.4%.
Combine the Insurers with the Usurers and by 2008 that number was up around $US100 trillion
It's not just the Kingdom of Denmark that has that stench of rottenness, it's Global baby...
I just wonder how many Cantabrians will be voting for the man from Merrill Lynch this time around?. or will they be more in favour of Merrilly Lynching the smiley one and his pals?. -
Nice wordplay Steve B!- drew a smile on this quake&circumstance- soured face-
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Kumara Republic, in reply to
Coming up next... The City That Sued God.
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Islander, in reply to
Heh! That'd be a come-up for the books eh?
(paticularly like the sued=deus bit...)
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When the news should be the basis for the chorus of dissent the NZ Herald editorial, " A time for making new starts" reads as National Party press release.
I hate how editorial writing is never ascribed to anyone – the “great” anonymous point of view.
http://msn.nzherald.co.nz/nz-government/news/article.cfm?c_id=144&objectid=10734522
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From the Herald editorial
In such circumstances, it behoves the people of Christchurch to count their blessings.
So every day is Thanksgiving Day? Ok, here goes: I am thankful for my house.... no wait, scratch that, it's munted.
I am thankful for my husband's job that pays for.... no wait, scratch that, earthquakes killed that income.
I am thankful for my children's awesomely progressive inner city school... no wait, that's now in the outer suburb of Halswell and not nearly as well-resourced.
I am thankful for insurance that covers us in disasters like this... but hang on, I'm still waiting. It's nearly 10 months now, and I think I'll be waiting a bit longer yet.
I am thankful for the educational opportunities... bugger that - how can I contemplate any further learning here when the lectures take place in a tent and aftershocks disrupt both study and exams...?! It's hard enough staying to complete the Honours programme I started last year.
They are being looked after as they should be, as we all would expect to be in their situation.
Yeah... we feel 'looked after'. We all realise it's a tricky situation but I don't know any individual, family or business that feels like they're being 'looked after' by either the government or their insurance company.
They will put the silted past behind them with the blessing of all of us.
Blessing? We don't want your blessing! Give us our insurance payouts so we can get on with our lives.... lives that may not be lived out in Shakeytown. I've been looking at many options over the last 6 months, and hardly any of them involve sticking it out here.
If anyone's looking for a nice, liquefaction-free, small suburban section, there'll probably be one going in Somerfield pretty soon*... just as soon as we get rid of that dodgy house that refuses to fall down on its own.
*I've given up trying to define 'soon'. Whenever it is, it won't be soon enough, that's for sure.
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Nice wordplay Steve B!- drew a smile on this quake&circumstance- soured face-
seconded!
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BenWilson, in reply to
disaster insurance could be run as a public utility for NZers
Since we end up footing the bills anyway when the insurance companies won't pay, it would be rather nice if the country actually got the premiums.
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Hebe, in reply to
Bloody hell. Excellent piece. That 1995 liquefaction map is so accurate, right down to my little strip of the riverbank being fine while most of the rest bubbled.
More on Christchurch City Council and Tony Maryatt: this morning's Press piece on the changed process of awarding of vital contracts (one being the inner city plan) hidden in an innocuous-sounding heading.
Note this
(Council purchasing and planning manager Jake) Rance said the council had agreed to exempt emergency recovery work from the usual requirement to put $50,000-plus contracts out to the market ... Consultants (appointed) either had knowledge of the city and the council's current planning; possessed skills and experience that were relevant to the project; had a relationship with the council; or had been recommended by relevant professional bodies.
"Staff recommended the chief executive be granted delegated authority to approve future contracts, as further consultants could be needed. "
A relationship with the council indeed! What the hell is happening in this city? Maybe Brownlee needs to Ecan it.
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The argument for the longest time is that the government has no business becoming involved in things like insurance and banking because the free market does it much better.
However it has become clear that "better" depends very much on perspective.
Given the enormous success of ACC, in spite of it's many flaws and absurdities it has done a much better job of compensating people for accident and injury than any private system in the world.
And given the evolving disaster that is private insurance in CHCH.
Then surely there is a strong case for a government run insurance scheme in New Zealand. Expanded out from the EQC to completely cover losses from disasters and maybe even more. Such an entity could then have the focus of "insuring New Zealanders against loss" rather than maximising profit.
Of course it would compete (unfairly) against commercial insurance companies but frankly after their performance in CHCH I really have no sympathy for those poor commercial entities.
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BenWilson, in reply to
Given the enormous success of ACC, in spite of it's many flaws and absurdities it has done a much better job of compensating people for accident and injury than any private system in the world.
Amen to that. If my son had suffered his accident anywhere else in the world, the doctors would have bent over backwards to deny it. But here, they not only admitted the possibility, but advised us to make a claim, supported by their testimony, and OMFG what a difference it has made to him.
Also, one of the big advantages that could come from insurance being in the hands of government would be that the existing protection of prejudice could be removed. Currently, actuaries are not actually obliged to explain why it is that they accept or refuse an application, and it could well be on the grounds of discrimination that is totally illegal in other arenas.
This might make insurance more costly. But it also might not - it has for a long time seemed to me that the main source of rising insurance costs is greedy shareholders demanding ever increasing returns. Insurance is not like other capitalist ventures, it doesn't make a damned thing, so a continual rise in profits should not be expected, the way it might be from a factory. Surely "good profits" is enough. It's a financial service, complementary to banking, and a big part of the current recession/depression is caused by confusing it with capitalist enterprise.
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Interesting discussion. I note Chris Dempsey's reference to the blog I posted a couple of days ago about the Christchurch earthquake risk assessments done by EQC and scientists at NZ Institute of Geological and Nuclear Science in the late 1980's and early 1990's. Here's a concluding extract:
"....This information cites four earthquakes that did severe damage in and very close to the City of Christchurch (1869, 1901, 1922 and 1987). Based on this information the EQC report predicted a return period for another equally devastating earthquake of 55 years. Given the Cheviot earthquake in 1901, and then the Christchurch February 2011 earthquake - exactly 110 years later - with a couple of big ones in between, perhaps their predictions are conservative. New Zealand was advised this earthquake sequence was likely. So whose fault is it that authorities didn't act?...."
You can see this blog at: http://joelcayford.blogspot.com/2011/06/faulty-thinking-about-christchurch.html
There is another post immediately following that one about plate tectonics and what's happening. User friendly.
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There was a great (albeit a tad disheartening) letter to the editor in the Press yesterday (June 27), from Chris Hutching, which takes apart Bob Parker's contention (reported in the Press) that there were 20,00 sections available for purchase in Christchurch/Canterbury, Hutching then notes that Parker's official media statement only says 17,000. He then queried real estate sources who say there are fewer than 3,000 sections with services available for immediate sale, and that it takes a good 12 months to ready a section.
And the 10,000 homes in the Orange Zone (and the white Zones) haven't even got to step one in this process yet - Log Jam coming!
Hutching then goes on to point out that Parker, who chaired the Urban Development Strategy prior to his mayoralty (and the Earthquakes) discouraged new subdivisions in favour of innercity high rise apartments.
I especially like the bit where Brownlee told Hutching that "there may not be a log-jam because he calculates quite a number of Red Zone residents will head off to rest homes, others will leave town..."
Gee Gerry, which rest homes would those be?
in our area nearly every Rest Home is closed and badly compromised, and I wonder, where are your figures to back that contention up?
or is he just making stuff up like Alasdair Thompson?Any way congrats to Chris for doing some digging and sharing with the community, beyond the pay wall...
(and apologies for my paraphrasing in places)
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Ian Dalziel, in reply to
Also, one of the big advantages that could come from insurance being in the hands of government would be that the existing protection of prejudice could be removed.
and to think that is the roots from which
Tower grew... -
Why can’t NZ provide insurance as a public utility for its own people?
Well it can. But it needs to be tied into the international insurance market. New Zealand simply isn't big enough to cover for a significant insurance event like what's happened to Christchurch. Like individual households join together in an insurance company to spread the risk, so do insurers join international backing schemes to spread their risk - buying insurance for themselves.
It would do no good if they didn't - all our insurance companies would need to be bailed out by the government when something big happened and then it's not insurance, it's just the government paying for everything again. At least at the moment some is being covered by overseas.
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Sofie Bribiesca, in reply to
Given the enormous success of ACC, in spite of it’s many flaws and absurdities it has done a much better job of compensating people for accident and injury than any private system in the world.
And given the evolving disaster that is private insurance in CHCH.
Then surely there is a strong case for a government run insurance scheme in New Zealand.
Bear in mind….
Tower was government owned originally
and…
National are paving the way to privatise ACC. Just ask Nick Smith about that!Sorry Ian, see and read, you got there first!
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