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Thursday, 19 February 2015

Comments on the ICNZ Revised Fair Insurance Code - Part 1

An initial reading of the Revised Code creates the impression of it being a reasonable document. If you were not familiar with what had happened with insurance claims post-earthquake a second glance would seem unnecessary.

To not take a second look at the words used, but bask in the warmth and comfort promised by the publicity hype, would be a dangerous oversight. Dangerous because post-earthquake insurance claims created an environment which highlighted both new and existing problems, and these have not been dealt with.

Disasters bring about the unexpected, create new problems, and put people on the spot. The major initial problem was the scale of the work facing insurance companies. As with EQC and the Christchurch City Council, the scale of the problem was beyond both their organisational ability to respond and also the adaptive capacity of most of the leadership.

Adding complexity to this was was the rapid involvement of re-insurers whose sole interest was reducing their exposure to costs. The spectre of re-insurers extending their influence, and demands for minimising costs at the level of individual properties, haunted many waiting for their claims to be assessed. It seemed to explain a lot of unexpected and unwanted behaviour on the part of insurers (staff, agents and contractors). However, not every problem can be laid at the feet of international avarice (more about these guys in a later post).

Insurers continued with their pre-earthquake procedures, this time on an incredibly larger scale. For the first time enough problems affecting customers were apparent to see that there was a pattern in insurer behaviour: not all insurer employees (or agents or contractors) were suitably trained, qualified or competent, some had behavioural or inter-personal deficiencies and treated customers badly, on occasions in a bullying or threatening way, there was a pattern of insurers attempting to minimise claims, reinterpreting policies, changing assessments or positions (sometimes frequently), making decisions on behalf of customers that did not adequately protect them, refusing to volunteer or denying or delaying access to claim information, delaying access to dispute resolution.

When considered in this light the question to ask is: does the Revised Code remove these problems? The answer is no.

Some of the content of the Revised Code is dubious, and there are instances where it seems self evident (blindingly obvious?) that the intention is to maintain a situation that acts against the interests of customers to ensure insurers continue their disproportionately dominant position during claims processing.

Basically, as discussed in the next post, the Revised Code represents a lack of good faith on the part of insurers.

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