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Sunday, May 29, 2011

Insurance industry disputes Ombudsman - ISO

The Insurance and Savings Ombudsman (ISO) is a person and organisation established and funded by the insurance industry to provide a means for unhappy customers to have insurance related disputes resolved. More information on the ISO can be found here.

The ISO have released a new two page disputes brochure.  It is not a particularly informative brochure, but does outline the procedure to be followed with your insurance company before you can complain to the ISO, and what happens after the ISO receives your complaint. You can get the brochure here.

There is a certain amount of window dressing in the brochure. It lays out an optimistic view, set in circumstances that don't include the scale and size of damage arising from a major earthquake. Despite the number of times encouraging words are used in the brochure (independent, impartial, free, help) the ISO is part of a potentially tortuous and one-sided process. These problems are discussed here.

The Terms of Reference (rules) covering the ISO (here), include the limitations on what the ISO can look at, and specifies the process to be followed. Some of these limitations and processes are covered below.

Despite what the brochure may imply, the process for dealing with difficult insurance complaints is neither easy nor quick. It is not user friendly, nor transparent - imagine being involved in a court case where you can't state your own case, you don't have a lawyer, the judge is another city, you don't know what is going on until the end, and up to $200,000 is at stake.

The moment it looks like something is going wrong in dealings with your insurance company, seek assistance. Try your local community group, or CanCERN (www.cancern.org.nz) or Community Law Canterbury who provide free legal help (here). There is too much at stake to try and sort it yourself.

The limitations on what the ISO shall consider include:
  • claims exceeding $200,000 plus GST will not be considered by the ISO without the consent of the insurance company. (Some houses requiring major repairs, and the many more that are to be rebuilt, will exceed this amount. It is not clear whether the $200,000 amount includes, or excludes, the money paid out by EQC).
  • cases that should be dealt with elsewhere will be excluded (i.e. cases the ISO is satisfied should be referred to one of the following: courts, statutory complaints or conciliation services, mediation or arbitration).
  • cases which are also under consideration by some other process (e.g. as in the previous bullet point).
  • complaints will not be pursued if the complainant (you) has behaved unreasonably - in a trivial, frivolous, or vexatious manner, or in bad faith. (Don't get angry - get help! If your relationship with your insurer deteriorates, you get angry towards them, say what you think, treat them as they treat you, they may use this as evidence of unreasonable behaviour. If you feel that the staff of your insurer are treating you badly [anything from inefficiency or incompetence to rudeness or abuse] talk with someone about it before you do anything you can't undo).
The process is also covered by restrictions:
  • a complainant must give an undertaking to keep all information relating to an investigation confidential. (where a number of people share the same complaint they cannot share their experience in having it resolved. If this information is disclosed before the complaint is resolved the ISO will stop investigating the complaint.)
  • the ISO does not usually hold a hearing. (i.e. you cannot appear before it to state your case. The ISO is based in Wellington and has already stated an office will not be set up in Christchurch to deal with local complaints. The ISO will consider holding a hearing, but that seems to involve travelling to Wellington to do so.)  
  • the ISO is not bound by precedent.
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