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Saturday, February 28, 2015

Assessing the ICNZ Revised Fair Insurance Code - Part 2

As we get further into the Revised Code the number of new issues raised slows down.

Where the Revised Code deals with straight-out mechanical areas it works better and there is more clarity about what an insurer needs to conduct it’s business.  Despite this the position of the customer does not improve.

Click on the link to read more nitty gritty.

Friday, February 27, 2015

Where to from here for ICNZ?

First, a minor correction regarding yesterday's post.

The title, as originally posted, was almost what was intended, but not quite so my apologies for that. It was a bit of tongue in cheek and there was supposed to be a question mark at the end of the title – the omission was missed and I have now put one there. Even the Avonside blogger can get a little irritated and distracted when a lot of hard work is dismissed off-hand as "ill-considered" (oops, “ill-informed”.

I was going to continue the analysis of the Revised Code this morning but that has been deferred until tomorrow. Instead it would be useful to briefly consider what ICNZ might do from here.

Clearly they are unhappy with what has been termed the "ill-considered" (oops again, “ill-informed”) views expressed on this blog.  If that is the well-considered view of ICNZ then, presumably, nothing further will be said because they have put their case as succinctly as they can. Should, however, they do think there is more substance than they are willing to concede then something has to be done.

In an ideal world insurers would simply concede that customers are not going to be as well served as they would like, and rewrite the Revised Code. This is unlikely to happen.

Insurers are too comfortable having the sale and interpretation of insurance policies done exclusively on their terms and free from legislative interference. To relax this grip would be seen as detrimental to their business model. Yes, they are offering checks and balances along the way, however the personal cost of travelling along that uncertain path is high. Past and current experiences are that it is a long, drawn out process which has little cost to the insurer but extracts a disproportionately high to immense personal and financial cost for the customer. An extreme case is outlined here. Such a case is very rare, but the rarity is in the response of this unfortunate man, not in the difficulties customers face.

So what might ICNZ do? The same as all big businesses do in the face of criticism - reach for the lawyers? That may not be a bad thing if the Revised Code is subsequently modified however, as mentioned above, it is unlikely to happen.

An alternative is that a whole lot of fine, reasoned words based on seasoned experience and judicious well-considered thinking will be produced from an eminent (or pre-eminent) source to pacify and reassure us. Will it be substance or flimflam? Another alternative might be bile and invective.

Will keep you posted.

Thursday, February 26, 2015

The Empire strikes back?

A journalist for Insurance Business Online yesterday wrote an article entitled New code slammed by earthquake blogger (here). It is a concise and well organised look at how the Revised Code is being analysed on this blog.

Shortly after the article was published Tim Grafton, Chief Executive of the Insurance Council of New Zealand (ICNZ), made the following comment:

Surprised and disappointed that this ill-informed blogger, who did not submit on the new Code, was given such prominence and our views were not sought. The Code’s timeframes for responding to customers follow best practise …

The rest of the comment is the standard PR stuff used in damage control situations. So, does this blogger resemble the description of being “ill-informed” and “did not submit”?

The CanCERN newsletter for 20 February this year has an article on the Avonside Blog starting up again. Part of the text reads "Lawrence was the main man behind CanCERN’s submission to the Insurance Council on the revised code"

In addition to having written the submission, I accompanied Leanne Curtis to meet with Tim Grafton for more than an hour when he came to Christchurch to hear submissions. Tim and I subsequently exchanged an e-mail (or maybe two) of clarification after the meeting.

It would seem to me that there is no truth in the joint accusations of being ill-informed and a non-participant. Rather, if I must blow my own trumpet, I am as eligible as anyone to make comments on the Revised Code. And so I shall.

Wednesday, February 25, 2015

Assessing the ICNZ Revised Fair Insurance Code - Part 1

Now we get to the nitty-gritty. If a paragraph by paragraph analysis isn't your thing come back next week, when we will be looking at the important stuff that was left out of the Revised Code.

Click on the link to continue reading.

Monday, February 23, 2015

Comments on the ICNZ Revised Fair Insurance Code - Part 3

Some general issues

These issues arise in various parts of the Revised Code. It is useful to keep them in mind while reading the Revised Code, to see how there is a continual stacking of the document with content that favours insurers and puts customers at risk.

Keeping each other informed: As mentioned previously there is heavy emphasis on customers informing the insurer of existing and changing circumstances. This is understandable, as such information is key to the insurer knowing the status of the risk associated with the policy. Consequently, the Revised Code is laden with obligations on the customer to be forthcoming and fulsome about this. There is, however, no equivalent obligation placed upon insurers.

Section 8 of the FAQ accompanying the Revised Code excuses insurers from making an effort to provide lists of required information or summaries of policy wordings. In the absence of suitable lists and explanations customers, who are not experienced with insurance contracts, are being put at risk. The problem is increased for those who aren't familiar with legal documents or are not proficient in English.

What else might customers want to be informed about? How about up to date information on developments in insurance. At one level there is news about insurance determinations by the Insurance and Savings Ombudsman, or the Courts, that change how claims will be treated or decided. At another is reminders of important and sometimes topical items that slide past the consciousness of the general population but is important to insurers: things such as what to do after getting a speeding ticket, or losing a licence, the storage of flammable goods or house maintenance.

General media releases are cheap and convenient but do nothing to inform customers in a direct and personal way. In any other industry keeping individual customers up-to-date would be considered customer service and support, in insurance it seems to be a risky inconvenience and cost.

Statutory Rights: Continuing with past practices there has been an aversion to mentioning potentially inconvenient statutory rights.

One such area of omission has been the Privacy Act 1993. For those unfamiliar with the Act it would be very easy to draw the conclusion that information gathering, accessing, and correcting that information, is controlled by insurers – this is the way it is portrayed in the Revised Code.

Treating you “fairly”: The use of the word “fairly” throughout the Revised Code is bound to cause problems in the future. An insurance policy is a legal contract and, whenever a claim is made, what follows is determined by the legal meaning of the contract. The use of “fairly” is somewhat cynical and could be considered calculated to create a confused mind-set that in some way insurance claims are now about what is fair, and not driven by upsetting legal interpretations. Puffery with dire consequences?

The customer’s best interests: There is no mention in the Revised Code of the insurer's obligation to act in the best interests of the customer.  Where is the commitment to ensuring that, in fulfilling a claim through to completion (e.g. repair or rebuild), the insurer will protect the interests of the customer by ensuring the whole process is efficient, of a satisfactory specification and quality, and does not put the customer to unnecessary delay, expense or stress?

The bottom line: the Revised Code is superficial, creates the appearance of fairness, but does nothing to ensure that the customer is informed, empowered, or protected to any useful degree. The Revised Code is motivated more to stave off any legislation of insurance activity than correcting the shortcomings of insurers and protecting customers.

The next post, on Wednesday, will be the beginning of a clause by clause assessment of the Revised Code.