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Tuesday, 17 February 2015

The Revised Fair Insurance Code

There has been a flurry of insurance related developments this month. Recently EQC covertly released a Customer Interaction Review on how they had performed and on Monday Vero released a report about Canterbury four years on, outlining Vero's experiences, the improvements made to it's processes and how it envisages future disasters should be handled.

The most significant release has been that of the Insurance Council of New Zealand (ICNZ) who announced their Revised Fair Insurance Code. The Fair Insurance Code is the code of conduct all major insurers have signed up to and, in general terms, it outlines how an insurer is required to behave.

Despite the glowing terms with which ICNZ have described their Revised Code a close reading of it shows they have produced very little in the way of a fair, transparent or customer friendly way of doing business.

The effect of much of what was raised by submissions has been changes to treat some of the surface issues, but not address important underlying problems caused by the way insurers carry out their business in New Zealand. This is not a healthy situation for customers of insurance companies, and continues to validate the proposition that the insurance industry is not a suitable candidate for self-regulation.

The next few posts will start with a summary of how the Revised Code reads (recommended reading for everyone) followed by a commentary on the Code and the accompanying FAQ and finish with a look at all the important bits ICNZ decided to leave out.

Click on the link for the rest of this post …

The Code was revised for two reasons. The Code is reviewed on a regular basis and the issues raised after the Canterbury earthquakes had shown gaps and deficiencies in the Code. In late 2013 ICNZ announced it was reviewing the Code and called for submissions from interested parties.

Submissions closed on the 1st of March 2014 and the internal review process assessed the submissions made. CanCERN, for example, made a substantial submission providing a wide ranging substantiated report of the numerous problems and hazards experienced by it's members and the public at large. Further comments on submitters are made below. The CanCERN submission can be downloaded from Google Drive here.

After a six month extension to the original deadline the Revised Code was announced earlier this month. You can download a copy of the Revised Code from the ICNZ website here.

As stated above, despite the glowing terms with which ICNZ have described their Revised Code a close reading of it shows they have produced very little in the way of a fair, transparent or customer friendly way of doing things.

A  final point - it is worthwhile noting who did, and who did not, make a submission to the Review. As announced by ICNZ the submitters to the Review were:
  • Banking Ombudsman,
  • CanCERN,
  • Commerce Commission,
  • Consumer NZ, David Adams,
  • Fairway Resolution Limited,
  • Financial Services Complaints Limited (FSCL)
  • Human Rights Commission,
  • Insurance and Savings Ombudsman (ISO),
  • Jake Preston,
  • Ministry of Business, Innovation and Employment,
  • Topografo.
Of these, two submitters have close connections with the insurance industry, being part of the industry's Dispute Resolution Service (FSCL, ISO).

Conspicuous by their absence are both the New Zealand Law Society and the Office of the Privacy Commissioner.

ICNZ specifically invited the New Zealand Law Society in November 2013 to make a submission and yet they did not. Considering the rise in insurance litigation in post-earthquake Canterbury one would have thought there might have been some concept in legal minds that the Fair Insurance Code was broken and changes required. Was it ineptitude, sloth or the absence of a fee for service that put them off making an effort?

ICNZ did not specifically invite the Office of the Privacy Commissioner to contribute, and there would be no surprise in that, as insurers frequently failed in their obligations under the Privacy Act 1993. Why invite trouble? Then again, the Human Rights Commission weren't invited either, but was proactive enough to make a submission. Does the Human Rights Commission have higher calibre leadership than the Office of the Privacy Commissioner?

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