The following extract is from Clayton Cosgrove's contribution to yesterday's Christchurch Earthquake bulletin edition 56, which can be found here. (Note: in the bulletin the whole text is just one paragraph. As reading it in that state is a daunting prospect, I have broken up into digestible paragraphs. Apologies for any confusion that may cause).
At last night’s Kaiapoi Residents’ Association meeting, residents heard a high quality legal presentation from an independent legal representative on the tactics being employed by some insurance companies and their project managers.
Clauses are being inserted in insurance company project management contracts for the repair and rebuild of houses which seem to give the insurance companies, through their project managers, great power over claimants while claimants are left holding most of the responsibility.
In one example discussed last night an insurance company is requiring claimants’ EQC payments including the excess to be immediately handed over to them on receipt. Presumably this allows the insurance company to sit on the money in the interim and earn interest before the repair or the rebuild starts. There is no legal basis for this. In one case brought up last night, a bank had been written to directly in respect of a particular claimant’s payment.
In another example, claimants are being asked to indemnify insurance companies and their project managers in respect of any breaches when entering into arrangements with third parties. People are asking — WHY? Clauses are being slipped in with no explanation. These issues are causing real worry and stress for claimants who don’t have the legal expertise to interpret their contracts.
At last night’s meeting, cabinet minister Kate Wilkinson said the Government would not interfere with private contractual arrangements. People aren’t asking for that. They want the Government to do what the Australian Government did — that is, to protect claimants with some degree of legal advice to help them interpret their contracts. I have repeatedly told Gerry Brownlee this, but he isn’t listening, and nor is Kate Wilkinson.
If people haven’t got the confidence in their insurance companies to sign off their claims, then this will badly impede the progress of the recovery. People are asking — WHY won’t the Government help us? Why, after doing the right thing and paying our insurance premiums for years, should we have to pay for our own legal experts to keep some insurance companies honest? This is not about interfering in private contractual arrangements. THIS IS ABOUT CONSUMER PROTECTION.