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Avoid payout delays after cyclone havoc

The public response to those most in need after Cyclone Gabrielle ripped their lives apart has touched many of us. It feels like a uniquely New Zealand thing to do – to reach out to those who have found themselves with nothing but the proverbial shirt on their back.

Every so often, when Mother Nature smashes into our little piece of paradise, we collectively help those brought to their knees to get back on their feet. Those efforts should never be underestimated.

As the horrible reality of the situation sinks in after the initial period of shock ends, the often prickly subject of insurance will come to the fore.

The Natural Hazards Insurance Bill passed by the Parliament this week will clarify in law that natural disaster insurance covers storms, floods, landslips, volcanoes, tsunamis, and hydrothermal activity.

However, the law is scheduled to come into effect in July next year. There are thousands of people wondering right now what has become of their future. They will likely be pinning their hopes on a straightforward insurance settlement.

I hope someone at the Beehive is making loud noises about doing everything possible to avoid the mistakes made around insurance claims after the Christchurch earthquake in 2011.

It’s hard to know where to start when reflecting on the Christchurch earthquake’s aftermath.

I recall that most house insurance policies were for full replacement and not insured for a particular sum. This meant that for each policy where a repair or rebuild could not be facilitated – and there were many – insurers and customers had to negotiate the total value of the loss before claims could be settled. This produced a ridiculous situation where insurers and homeowners went back and forth for weeks and months trying to agree on a number. Some homeowners, desperate to move on, settled for a low number with the insurer, who had all the time in the world and no pressing incentive to settle.

In some cases, the settlement process was extended by years and created more problems than it solved.

Land stability and administrative authority factors, including the establishment of the Canterbury Earthquake Recovery Authority, meant rebuilds couldn’t start for almost two years. More than 7000 homes were red-zoned and thousands of sites needed geotech assessments to determine how safe the land was to build on. There could be similarly big numbers in Hawke’s Bay alone.

It’s hard to believe, but there are insurance claims in Christchurch still outstanding, 12 years to the month after the event. Perhaps that’s not so surprising.

Ultimately, the Canterbury Earthquakes Insurance Tribunal was established to provide what was hoped would be a more equitable, expedient and affordable way for homeowners to resolve those long-standing claims with insurers [including Southern Response] and the Earthquake Commission. In what seems like common sense all these years later, the tribunal includes an independent, funded mediation service provided by the Ministry of Business, Innovation and Employment, which is experienced in mediation in housing.

Some similarly helpful post-cyclone innovations for those facing tough times would go a long way to taking away some of the uncertainty. For those people, July 2024 is too far away.

Roger Parker
Roger Parker
Roger Parker is the Times-Age news director. In the Venn-diagram of his two great loves, news and sport, sports news is the sweet spot.

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