Here is a link to a piece by Cam Preston about the current state of insurance claim settlements.  His view is contrary to that of the Insurance Council on its website here which says that its members are on track to settle the vast majority of claims in 2016.  IAG and Southern Response that together have over two thirds of the claims still have 5069 unsettled claims.  Currently there are only 209 active proceedings on the High Court Earthquake list.

By the judgment 24 February 2016 in Southern Response Unresolved Claims Group v Southern Response Earthquake Services Ltd [2016] NZHC 2345 the High Court (Mander J) declined the Group’s application for leave to bring the proceeding as a representative action in the name of  its nominated representative, Cam Preston.  The Group is an unincorporated body of 46 people with unresolved claims with SR.  The claims are in various stages with some still “under cap”.  The judgment refers to there being 2587 unresolved SR claims.  The Group Claimants appeared to have differing issues with SR, so the Court was unable to identify issues common to the entire group that is a necessary prerequisite to a representative action.  The Court suggested that the Group have another look at the issues that united them and perhaps identify sub-groups.  The judgment also comments on the litigation funding for the proceeding.  It refers to the participants being liable for 20% of any settlement together with a share of the costs.  It would be useful for the Court to decide some of the issues suggested by the Group, but is uncertain whether the Group will proceed to refine the issues/groups and apply to the Court again.

Here is a link to the ABC Australia show “Lateline” and its piece from 16 February 2016 about the delays in the rebuilding of Christchurch.  It contains interesting comments about IAG and its performance.  Below are 2 quotes from IAG that are interesting.

 

RENEE WALKER, IAG: We work with our customers. It’s always a negotiation, so they’ll be presented with a cash settlement offer and then is a negotiation. We’re not in the practice of forcing cash settlement. So there is always a conversation.

RENEE WALKER: We think and we maintain that we are settling our claims at a reasonable rate. And we would like to work with our clients to make sure that we get an outcome that’s fair for both parties.

Here is the link to a speech by Justice Kos at a Judges’ Conference in Brisbane recently.  It is about the Christchurch earthquakes and the judicial response to the earthquakes.  It goes through  the major cases and comments on the judicial processes implemented to deal with the cases.

Some earthquake court cases have been in the Court system since 2013.  They have dragged through the joint expert process that the Court used to see as essential, but in practice achieved very little towards resolving claims.  Now that the cases have completed the interlocutory phases they are being allocated hearing dates.  Amazingly cases of 5 days hearing time are now being allocated hearing dates in March 2017.  That is appalling.  So much for the quick resolution of earthquake cases.

People that have bought properties after the earthquakes are likely to have taken an assignment in relation to EQC and insurance policies.  This may involve an assignment of the claim, the proceeds, the rights and/or the policy.  Each is a different property right.  This is likely to be recorded in the property sale and purchase agreement and a deed of assignment.  There has been no issue with EQC recognising the right of the new owner to receive what may have been due to the previous owner.  Some insurers have taken the position that the policy cannot be assigned without their consent.  Also that the purchaser cannot acquire reinstatement rights or a right to reinstatement proceeds.  Insurers may say this is a personal right.  There are legal arguments both ways.  So far the Court has not had to consider this issue at trial.

We continue to come across home owners who do not understand the extent of their obligations under a cross lease in relation to insurance for earthquake damage.

The cross lease will usually contain a term obligating an insured to spend any insurance money received on reinstating the damage.  So an insured that takes a cash settlement could be sued later by other owners if they do not spend the money on reinstating.  All owners can agree to vary the cross lease if needed to delete this requirement.

If an owner repairs or rebuilds, but builds it different to what was there then the insured will need the consent of the co-owners. The plan may also need redrawing.  This can be an expensive and time consuming legal process.

Be very careful with any transactions involving cross lease properties.

 

 

Cash settlements 

Here is a link to EQC’s advice about what to do after the earthquake on 14 February 2016.   You have 3 months to make a claim.  The 3 month period cannot be extended.  It is better to be safe than sorry.