I don’t hold much faith in insurance companies, especially a certain life company in Carlton Gore Road.

Most insurance companies are weasels and yesterday that was proved out in the High Court.

The Government faces a potential bill of hundreds of million dollars more for the Christchurch earthquakes after a declaratory court judgement found in favour of insurers over the Earthquake Commission.

The judgement was sought to clarify whether the repeated Christchurch earthquakes  would “reset” the amount of liability covered by the EQC.

The court found that the EQC’s $100,000 cap for buildings and $20,000 cover for contents was continuous cover, so it would be reinstated after each quake.

The court found that, with slight alteration to the wording, it favoured the  proposition that: “Neither the occurrence of, nor the making of a claim for an event of natural disaster damage, reduces the amount of cover available for a subsequent event of natural disaster damage at any time either prior to or on payment of a claim for the first event.”

But the EQC would be entitled, on payment of a claim, to an extra levy payment for the period between the first claim and the date the insurance policy expired.

If I was the government I’d teach these weasels a real good lesson by changing the legislation and placing some very tight controls on their industry. They take billions in premiums, and in the case of AMI they under cut the market, then along comes an event that they are supposed to cover and the pricks run off to the courts to avoid paying out. Weasels.


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  • John Q Public

    That’s just a determination about whether these were all separate events. Arguably it’s the EQC doing the weasling there, as they’ve been told they are.

  • peterwn

    Insurance companies re-insure with large overseas organisations (eg the gnomes of Zurich). Thus they were most probably obligated to go to court over this. In fairness to them all, their lawyers cooperated to define the ‘nitty gritty’ issues and not play legal games, and the courts cooperated by providing three judges for a short notice hearing.

    The Government must avoid the temptation of legislation that retrospectively increases any burden on the re-insurers, because this would erode the trust the international community has in NZ. Even Fiji is conscious of this to some extent eg not pulling a fast one on oil exploration companies.

  • pdm

    What peterwen said.

  • Paranormal

    I’d go further and say that EQC is a broken organisation and was broken long before the 22 Sept earthquake. The declaratory judgement has just confirmed what the government should have already known (but possibly didn’t) that because of their meddling in the private insurance market, they (the governmentr and consequently us the taxpayer) now have a much larger liability at a time they can’t afford it.

    What needs to happen is the government confirm a date in the near future that the EQC will no longer underwrite private disaster insurance. End of story.

    The reason why EQWD was originally set up (to cover potential damage as a result of WW2 that was not privately insured – and for a very good reason) was flawed and subsequent governments meddling has just continued the existence of a flawed and broken monopoly.

  • TitanUranus

    After the Bankers, Insurance company boards and politicians would be the ones for the bullet after I become Generalissimo for life.

  • abjv

    Last week the Govt fessed up that the quakes were going to cost twice what they thought as the damage to houses was twice what they had reckoned. Not 12,000 homes munted but 30,000 or something like that.

    AMI insured a big chunk of Christchurch. AMI was verging on bung under the first estimate and had to buy a Govt guarantee. Now that the damage is 2x, funny how we haven’t heard anything about AMI’s recalculated exposure. I wonder how much Bill English added to that deficit projection to include the nationalisation of AMI?