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September 2019
INSURERS GRAPPLE WITH METH QUESTIONS
Post-Gluckman Report, what comes next for insurance companies assessing contamination claims?
Rogue employees - the insider threat Risk under the microscope
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CoverNote is the official publication of IBANZ and is distributed FREE on a quarterly basis (March, June, September, December) to members throughout New Zealand and associated companies. Additional copies are available at a cost of $7.50 per copy, or 12 month (4 issue) subscriptions at $30.00, inclusive of postage and packaging. The articles or opinions featured within this magazine are not necessarily the opinions of the publishers or IBANZ, and they do not accept responsibility for the content of articles featured within the publication. No part of this publication may be reproduced without the written permission of the publisher. The publishers do not accept responsibility for loss or damage to unsolicited photographs or manuscripts. IBANZ enquiries should be made to: Gary Young, Chief Executive, IBANZ. Email: gary@ibanz.co.nz IBANZ National Office located at: Unit 4D, 2B William Pickering Drive, Rosedale, Auckland 0632 PO Box 302504, North Harbour, Auckland 0751 Telephone 09-306-1732. Website: www.ibanz.co.nz
Gary Young CEO, IBANZ
A year of engagement
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he last six months have seen more involvement with government than any time in the last two decades. There is certainly a lot of consultation, a lot of talk. So, what has all the talk been about? Well it started with a public inquiry into the Earthquake Commission. This involved written submissions followed by numerous public meetings around the country, all of which will be summarised in a report to Government next year. Alongside this we have also been involved in helping with communications on the changes to EQC cover from July this year. The next issue started in Australia with a Royal Commission looking into the conduct of financial services institutions. The regulators in New Zealand are following up the same issues given how many of the companies are also in our market. Although no significant issues have been identified in the general insurance broking market, the response by regulators and government could cause issues for our sector. Our submission emphasises the issues are not found in general insurance broking. Building systems are another area under review, with compulsory insurance being considered. This is an issue the general insurance market needs to be involved with to ensure any proposed solution will work with the insurance market. A major review for our members is the one looking at insurance contract law. This has potentially far-reaching impacts given it is looking at all insurance legislation implemented over the last 110 years. Our submission addressed the key issues for members, a copy is available on the IBANZ website, as are all our other submissions. The regulator has produced two consultation papers; the first on standard conditions for transitional licensing, the other on exemptions under the new regime. The proposals will affect all members and need to be taken into consideration when preparing for licensing. Other matters we have looked at include changes to the Incorporated Societies Act, which affect the structure of IBANZ. The final version of the code of conduct has also been issued and continues to raise issues around the competency requirements. We are still waiting to see the final proposals for disclosure to clients. The February cabinet paper gave some idea of where this is headed but the timeframes for implementation may be very tight. Another key issue on our radar is the FENZ levy review which will look at the funding on a first principles basis. This tax on insurance is becoming a real issue affecting the ability of New Zealanders to afford full insurance cover. We are seeing increasing under-insurance or non-insurance and the levy is certainly adding significantly to the affordability issue. In addition to these formal submissions we are also regularly engaged in discussions with the various Government departments, Ministers, regulators and other stakeholders. These frequent opportunities to participate in consultation are very welcome. We trust it continues and that our voice is not only heard but also acted on.
Gary Young, CEO, IBANZ
Features 7. The Earthquake Commission Act changes: What they mean for buyers and sellers
18. IFSO Scheme Vehicle insurance: How you can help your clients 8. COVER STORY: Insurers grapple with meth questions Post-Gluckman Report, what comes next for insurance
companies assessing contamination claims?
Regulars 22. Do brokers and insurers owe continuing duties of care? 28. Assisting a business after a work accident
1. Welcome to CoverNote 4. News 42. Ask an Expert
46. Professional Development: Professional IQ College 48. IBANZ Contacts
WANT YOUR VERY OWN COPY OF
COVERNOTE? 34. Doig vs Tower Insurance: The Court of Appeal says no to an assigned claim 41. Conduct, culture and resilience in insurance
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PSC Connect New Zealand – Continues their Expansion PSC Connect continues to show impressive growth since its inception in 2012 with 43 Member Brokers and $50m GWP throughout New Zealand. The PSC Group also continues its expansion globally with two recent purchases in the UK and Australia. With the anticipated completion of the acquisitions of Griffiths Goodall and Paragon, the PSC Group will control in excess of AUD1.5b in premiums, making the group an increasingly significant participant in the insurance market. Dave Penfold, National Manager in New Zealand, has announced some recent additions to the Management Team with Geoff McLeay from their PSC Sydney Branch as Southern Regional Manager, Bernice Stewart as Executive Broker and Denise Bourdôt as Compliance Manager. PSC Connect Life NZ has also recently been launched with Steve Morris of SW Morris managing this new division. “Steve will be building a Life Financial Advisor network across New Zealand to complement our General Insurance portfolio” Penfold says. At their recent Australasian Conference on the Gold Coast, New Zealand won the Region of the year having achieved 41% growth. Pictured here is Dave Penfold with the award and Jason Bayly of Jason Bayly Insurance Brokers Ltd who won the NZ Member Broker of the year award.
BE YOUR OWN BOSS PSC Connect gives you the power to succeed. If you want the freedom and flexibility to run your own general insurance broking business then speak to PSC Connect. The PSC Connect team provide you with full administrative and compliance support. Plus, you’ll have the support and buying power that comes from one of the largest publicly listed insurance broking groups to help you build your own asset.
For confidential enquiries, call: Dave Penfold 09 358 1186 dpenfold@pscconnect.co.nz Proud members of IBANZ & Steadfast
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NEWS
Supreme Court confirms insurers have to agree to insurance cover being passed on A Supreme Court decision in the IAG v Xu case has affirmed long-held legal principles regarding assignment law, the Insurance Council says. It involved a house sold on an “as is” basis with an assignment of the original owner’s rights under their insurance policy to the new owner. In most cases of “as is” sales the rights are no assigned because the original owners will have settled their insurance claim for the earthquake damage. They keep the cash settlement and the sale price is reduced. In the Xu case, Natalie Hall-Barlow and Matthew Barlow had a
"Insurers strive to act with integrity and fairness in all their dealings," said chief executive Tim Grafton. "In this case, the purchaser did not seek the insurer’s consent to a deed of assignment. Therefore, one could not legally be provided by the property owner." He said the Supreme Court had also confirmed a principle of assignment law: that an assignee could only assign a loss they have actually suffered. "Selling a property instead of repairing it means the policyholder has avoided the financial cost of the repair work, which in essence means they have not suffered a loss," he said. "Claimants cannot assign a claim to recover costs they have chosen
policy with IAG. Their home was damaged in the Christchurch earthquakes and they claimed on their insurance for the damage. After three years, the claim was unresolved and they decided to sell the property to Ruiren Xu and Diamantina Trust. They assigned their rights in respect of their claim to the purchasers. At that point, they had not incurred any costs of repairing the house. IAG agreed that the purchasers were entitled to an indemnitybased payment but rejected the claim that they should receive the replacement benefits in the policy. The High Court and Court of Appeal backed IAG. The Supreme Court affirmed that decision. It held that the wording of the policy in this case made recovery of the replacement benefits subject to reinstatement by the insured. It said that references to the insured in the policy could not be interpreted as extending to assignees of the insured. Accordingly, the majority concluded that reinstatement by the assignees would not give them the right to recover the cost of reinstatement effected by them. The Insurance Council said the decision provided definitive confirmation that an insurer must consent to a deed of assignment to an earthquake-damaged property before its customer could pass that claim on to a third party.
not to incur. "The ability of insurers to choose whether to take on assignments is fundamental in their ability to adequately manage the risks they choose to hold," said Grafton. "Insurers ability to look after their customers and help them recover from adverse events is dependent on management of their existing portfolio and ongoing reinsurance support. If the Supreme Court had chosen to negate this long-held principle, it could have had far-reaching and very damaging consequences for the insurance market in New Zealand." He said the Insurance Council sympathises with Cantabrians who had purchased earthquake damaged properties with what they thought were valid assignments, especially where they’ve been unaware that those assignments needed insurer consent to be valid," said Grafton. The Insurance Council urged consumers who had invalid deeds of assignment to seek advice and support from the Greater Christchurch Claims Resolution Service (GCCRS). It recommmended anyone looking to purchase a property with a deed of assignment in future first speak to the insurer in question and ensured they had received confirmation the insurer consented to the assignment in writing before proceeding.
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September 2019
NEWS
Tribunal to hear earthquake claims Canterbury homeowners are being offered a new way to resolve their outstanding earthquake claims. The Canterbury Earthquakes Insurance Tribunal opened on June 10. Justice Minister Andrew Little said it would be a fair, flexible and cost-effective way to resolve issues. “This is great news for the tired and frustrated Canterbury homeowners who are still waiting for a resolution to their insurance claims from these earthquakes,” he said. “This tribunal will be a circuit-breaker for those disputes that have dragged on for too long and for people who deserve closure and to move on with their lives. “The tribunal gives flexibility. It will be a very human and
accommodating process that gives us a much better chance of bringing resolution and conclusion to these difficult claims.” Cases can be transferred from the High Court to the tribunal and homeowners can choose to have a representative to receive communications for them, an advocate who can speak on their behalf, and a support person to accompany them to all tribunal conferences and hearings. The tribunal is located in Christchurch and is chaired by former District Court judge, Chris Somerville. The Wellbeing Budget allocated $3.387 million for the establishment of the Canterbury Earthquakes Insurance Tribunal for the 2019/20 fiscal year.
Suncorp profit bounces A relatively benign year for weather has helped to boost Suncorp New Zealand’s bottom line. The insurer announced net profit after tax of $261 million for the full year ended June 30, up 76% on the prior corresponding period. Chief executive Paul Smeaton said the strong result was partly driven by an unusually low claims year for natural hazard events. “This is in stark contrast to the severe weather events of 2017 and 2018 which cost the insurance industry $469 million in claims, according to statistics from the Insurance Council of New Zealand,” he said. “New Zealand is rated second in the world in terms of our exposure to national catastrophe, and we only need to look to the 2010/2011 Canterbury earthquakes and 2016 Kaikoura earthquake for a reminder of just how exposed we are.” Smeaton said he expected New Zealand’s strong performance to continue into next year. “However, our expectation is that growth will return to lower single digit-levels, and claims will return to more normalised levels following very favourable weather conditions in FY19.” The general insurance business, which includes Vero Insurance and AA Insurance (a joint venture with the New Zealand Automobile Association), delivered profit after tax of $217 million, up 99% on the prior corresponding period. Suncorp said that was driven by disciplined portfolio management delivering strong top-line growth and favourable working claims experience, and the absence of any major natural hazard events. Smeaton said the financial year had seen Suncorp New Zealand join the Climate Leaders Coalition and commit to reducing greenhouse
gas emissions to targets in line with New Zealand’s proposed Zero Carbon Bill. “Since we started measuring our emissions in 2017-18, we have reduced our Scope One and Scope Two emissions by 16% and are on track to meet our new target for our corporate operations of a 51% reduction in these emissions by 2030, which is in line with the Paris Agreement. “In addition to this we continue to explore opportunities to build natural hazard resilience and financial resilience for New Zealanders.” Smeaton said the next financial year would see Suncorp New Zealand continue to focus on building a resilient business to meet a greater number of customer needs, with increased investment in digitising the business, improved customer communications, and improved claims experience. www.covernote.co.nz
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Tower axes disclosure requirement Kiwi insurer Tower has committed to remove the duty of disclosure from its sales and claims processes before the end of the year. Chief executive Richard Harding says that there had been a bit of talk in the news lately about how little trust people had in insurers and there seemed to be some truth in it. One of the things that concerned people most was not knowing whether their claims would be accepted, he said. "It comes back to the tricky, catch-all question that insurers can ask when you buy insurance, along the lines of ‘is there anything else that we should know?’ - which means that if customers unwittingly leave something out, they can be disappointed when it comes time to making a claim. "Because of these concerns, we’ve started removing this question from our systems, processes and policies, and by the end of the year, people who buy home, contents or car insurance from Tower will no longer be asked this question." Harding said in its place would be something called "Trust Both Ways", which made it Tower’s responsibility to ask the right questions when customers come to buy insurance. "All customers will have to do is answer the questions we ask truthfully," said Harding. "We’re doing this because we trust our customers to be honest with us, and in turn they can trust that we’ll pay their claim. It’s about giving our customers certainty. "Along with simple-to-understand policy documents, Tower customers will know up-front what they’re covered for and will be able to take comfort from the fact that if they’ve been honest with us from the outset, their claim will be accepted and paid. "Like we did with risk-based pricing, we led the way openly and honestly talking about these changes and we commit to this level of transparency for all changes we make that impact our customers.” It is likely that reform of insurance law will make this approach mandatory but commentators said Tower’s move was likely to put some pressure on other insurers to act before they were legally required to. AA Insurance removed the generic disclosure questions form its car, home and contents policies and processes more than 10 years ago. “At AA Insurance, we recognise that we’re the experts in insurance, not our customers, so we commit to asking all the questions we need to find a cover that's right for our customers. We pride ourselves on focussing on the customer and doing what’s right for them,” said Aaron Dickinson, head of product.
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September 2019
ADVERTORIAL
THE EARTHQUAKE COMMISSION ACT CHANGES: WHAT THEY MEAN FOR BUYERS AND SELLERS INCREASE IN THE CAP ON EQC RESIDENTIAL BUILDING COVER
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REMOVAL OF EQC COVER FOR HOUSEHOLD CONTENTS
EXTENSION OF THE TIMEFRAME FOR LODGING AN EQC CLAIM
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EASIER ACCESS TO PROPERTY-RELATED INFORMATION HELD BY EQC
our changes to the Earthquake Commission (EQC) Act have come into effect this year. They are part of an overall push to put in place the lessons learned from recent event responses including the Canterbury earthquakes. The changes relate to EQC’s insurance product, EQCover, and the claim management process to improve how EQC reduces the impact natural disasters have on people and property. One of the first changes that came into effect in February (and is retrospective) will impact vendors and prospective buyers, where obtaining EQC documents related to the property is important. EASIER ACCESS TO PROPERTY-RELATED INFORMATION HELD BY EQC EQC now has more scope to share information about residential property claims. The Act defines property-related information as information about natural disaster damage to a residential property (dwelling and land) and any claims made under the Earthquake Commission Act. It also covers information about the assessed cost of replacing or reinstating damaged property, what repair work has been carried out and settlement amounts. For example, EQC can provide claim information to a prospective buyer of a house that they have previously arranged to repair. Anyone can make a request for information about claims lodged with EQC, including previous claims. However, this does not mean that we share personal information such as contact or financial details. EQC is still bound by the provisions and protections under the Privacy Act, and to balance this requirement against the equal need to attend to the public interest. It can take up to 20 working days to obtain property-related information about any previous claims for damage, so to avoid delays it is still encouraged that the vendor request documents from EQC before putting their home on the market. The two changes to EQCover (and not retrospective) are:
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AN INCREASE IN THE CAP EQC CAN PAY FOR RESIDENTIAL BUILDING DAMAGE This change to EQCover sees the amount EQC can pay on new claims for natural disaster damage to residential buildings rise from $100,000 to $150,000 (+GST). The increase recognises the increase in building costs and means less over-cap claims will need to be passed onto private insurers. Cover for any damage above that amount continue to be according to private insurance policies. REMOVAL OF EQCOVER FOR DAMAGE TO HOME CONTENTS The second change to EQCover sees $20,000 cover removed for damage to home contents. This change means that, after a disaster, EQC will be able to focus its efforts on resolving claims for residential building and land damage. Again, cover for replacing damaged contents will be according to people’s private insurance policies. Both these changes to EQCover will be phased-in over 12 months from 1 July 2019 as existing insurance policies are renewed or replaced. EXTENSION OF THE TIMEFRAME FOR LODGING A CLAIM FOR DISASTER DAMAGE The final change to the EQC Act sees the time increased for lodging a claim for natural disaster damage from three months to two years. Despite this increased timeframe EQC are still encouraging people to make a claim as soon as possible following the natural disaster event. This is because delays in lodging a claim can make it more difficult for EQC to attribute the damage to a natural disaster and assess the claim. But with the immediate aftermath of a natural disaster being a very stressful time, it’s good to know Kiwis have that buffer if they need it. For more information on the EQC Act changes visit: www.eqc.govt.nz/act-changes www.covernote.co.nz
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COVER STORY
INSURERS GRAPPLE WITH METH QUESTIONS Post-Gluckman Report, what comes next for insurance companies assessing contamination claims? By Angela Cuming
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t was the bombshell report that all but wiped out the lucrative methamphetamine-testing industry. And now, more than 12 months later, the findings of the Gluckman Report may finally be starting to change the insurance industry, with indications pointing towards a new approach in how the big insurers will cover meth contamination. The report by Gluckman and Anne Bardsley found that New Zealand authorities had made a "leap in logic" setting methamphetamine contamination standards. In short, a standard based on what "clan labs" should be cleaned to in Australia was now being used as a trigger to start cleaning in New Zealand, despite no real health risk at that level. That standard was NZS 8510. It is still the official standard in force and says that high-use areas with a level of more than 1.5 micrograms per square metre should be regarded as contaminated, whether that contamination came from methamphetamine being smoked in a house or manufactured. Bardsley and Gluckman said in their report the standard was out by a factor of at least 10. In a house where methamphetamine had only been consumed, contamination would have to hit 15 micrograms per square metre before it needed to trigger a clean-up, the report said. The report had an immediate impact. Housing New Zealand was the first to react, quickly deciding to
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accept 15 micrograms per 100cm2, or the “Gluckman standard” as it became known. Then, following on from Housing NZ’s lead, the Tenancy Tribunal also adopted the new standard. “One of the difficulties for us is if you have the biggest player in town going with 15 as the standard it becomes very difficult for us to say to you guys you’re not Housing New Zealand so we are going to apply NZS (1.5 micrograms per 100cm2) to you,”Tenancy Tribunal chief adjudicator Melissa Poole said at the time. “We have taken a pre-emptive step and say ‘okay, from the date the Gluckman report was released we will accept 15 as the standard’.” The release of the Gluckman report also caught the attention of insurers, who had been seeing a rise in payouts due to methamphetamine contamination claims. In theory, insurers stand to save millions each year if the Government follows the advice of the report and increases the level of methamphetamine residue that needs to be found in a property for decontamination to be warranted. The insurance industry had already began responding to what was seen as an escalating meth problem as far back as 2016 and 2017. Then, IAG,Vero, AA Insurance and Tower all changed their policy wordings. Changes included capping cover for methamphetamine contamination, increasing excesses for meth claims, being more prescriptive around what landlords have to do to qualify for cover, and excluding cover from
COVER STORY
WITHOUT GOOD KNOWLEDGE OF THE FACTS, IT IS DIFFICULT FOR SOME PEOPLE TO COMPREHEND THAT SOMETHING THEY THOUGHT OR WERE LED TO BELIEVE WAS A REAL AND PRESENT DANGER TO HEALTH AT 0.5 MICROGRAMS NOW ISN'T CONSIDERED A PROBLEM UNTIL 30 TIMES THIS AMOUNT.
some policies. The big question now will be whether to review the way it treats methamphetamine contamination further to Gluckman’s report. Tim Grafton, chief executive of the Insurance Council of NZ (ICNZ) says insurers continue to follow the processes laid out in the customers’ policies for investigation and resolution of any claims relating to methamphetamine. “For many insurers,” says Grafton, “this involves referring to the New Zealand standard.” But that may soon change, he says. “We are aware that some insurers have begun investigating or moving towards the Gluckman report’s recommendations. “It is up to each insurer to decide how the over and manage claims relating to methamphetamine based on their appetite for risk in that area.” For New Zealand’s biggest insurer IAG, that means sticking with the NZ Standard 8510 – for now at least. “We’re conscious of doing the right thing by our customers which is why methamphetamine contamination continues to be covered under IAG home policies,” says IAG New Zealand’s Brendan McGillicuddy, manager home and contents. “This is in line with the NZ Standard 8510.” The insurer says, however, that it will be taking a keen interest in the
Government’s planned changes to the Residential Tenancies Act in the wake of the Gluckman report. “This is because changes will follow a rigorous review process and provide clarity and certainty over meth contamination for our customers who own rental homes,” McGillicuddy says. “We do not want to pre-empt changes to our policy coverage until there is greater clarity on this matter.” In 2017, IAG revealed that it forked out $14 million a year for methamphetamine claims at residential properties with claim numbers varying from 40 to 80 each month. The majority of claims related to methamphetamine use, with the average claim cost for methamphetamine contamination sitting at a hefty $20,000. Vero, the country’s second-largest insurer, would likely have been seeing similar payouts, so it is of little surprise that the insurer expresses misgivings about NZS 8510. Sacha Cowlrick, Vero’s executive manager consumer insurance, says the Gluckman report provided “very strong evidence” that the previous standards (NZS 8510) for meth remediation were “unnecessarily low”. “The report indicates that contamination is not normally dangerous unless there has been manufacturing of methamphetamine, which usually creates contamination at much higher levels that we are currently covering (around 30 micrograms per 100cm2 rather than the current level of 1.5 micrograms),” says Cowlrick. www.covernote.co.nz
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“Vero wants to ensure that we provide appropriate levels of cover to those customers whose health and wellbeing are most at risk due to meth contamination damage. We also want to reduce unnecessary claims and the associated premium costs for our customers.” From July 1, Vero introduced changes to its residential policies that make cover for meth contamination available to customers if the amount present is greater than 15 micrograms, which is the level recommended by the Gluckman Report, and adopted by Housing NZ and the Tenancy Tribunal. “At the same time, we are increasing the amount of cover available to customers whose claims are accepted,” Cowlrick says. “We will also be moving our rural and commercial policies to this level over time.” Tower has so far not given an indication of whether it is considering adopting the Gluckman standard, but has in the past called on the government to take action in response to the report on the management of methamphetamine testing and decontamination. In 2018,Tower chief executive officer Richard Harding said the insurer had long maintained the position that meth testing and remediation protocols were never based on science. “It is pleasing to see an evidence-based, scientific report into an issue that has been surrounded by and built on speculation and unfounded fears,” Harding noted. “Remediation of methamphetamine contamination has contributed to unnecessary costs being borne by our customers through higher premiums. “We believe that landlords and tenants should not have to unfairly pay for unfounded risks, and we will pass on any benefits from a change to the Ministry of Health guidelines to customers,” he added. Tower’s current policies linked to the Ministry of Health guidelines remain unchanged. Customers remain covered under the terms of their existing policies for contamination at the standards currently set, the insurer said. For Andrew King, NZ Property Investors Association executive director, any moves insurers make to adopt the Gluckman standard would be welcome. King was on the NZ Standards Meth Committee and says it was clear to him that the levels of methamphetamine that we were previously considering as a problem were “far too conservative”. “So, I was pleased with the Gluckman report,” King says. “The issue of methamphetamine is conflicting because the use of meth as a recreational drug is clearly having a devastating effect on many peoples’ lives. “However, the level of methamphetamine that users are consuming is extremely high and I also think that the word ‘contaminated’ was properly understood by the general public.” The fact that Gluckman couldn't find any evidence of any hospital admissions for methamphetamine -related illnesses anywhere in the world from residual meth in a property was also very telling, King says. “So, I think the Gluckman report was very good and it brought a level of common sense and understanding to the meth situation.” The NZPIF recommends rental property providers have insurance that provides cover for tenants’ malicious damage. “This covers many different situations, including methamphetamine contamination and we have a relationship with a specialty landlord insurance provider that provides this cover at a discounted price for our members to encourage them to have the right cover.” One issue still remains, says King, and that is that many people, including tenants and home buyers, are still concerned about residual methamphetamine in a property. “Without good knowledge of the facts, it is difficult for some people 10
September 2019
to comprehend that something they thought or were led to believe was a real and present danger to health at 0.5 micrograms now isn't considered a problem until 30 times this amount,” King says. “I can understand this, which is why the NZPIF believes that Government should embark on a public awareness campaign to educate people.” There is also some confusion as to whether rental property providers still need to conduct testing for methamphetamine, King says. “While the Gluckman report said that levels of 15 micrograms of methamphetamine is acceptable if it had solely been consumed in a property, the report still said that if meth had been manufactured in a property then the clean-up level should remain at 1.5 micrograms and cleaning a property to 15 micrograms is considerably cheaper than 0.5 micrograms. “This means that a landlord would still need insurance for a methamphetamine clean-up when manufacture is suspected or confirmed.” There is currently no legal requirement for landlords to hold insurance in order to let out a property, however MBIE strongly recommends that both landlords and tenants be adequately insured against any damages, and they are advised to thoroughly check what each policy covers. The Insurance Council is on the record as being a champion of the Gluckman Report. Upon the report’s release in 2018, the council welcomed its findings, describing them as a “clear and strong analysis” of the issue. “It is refreshing to see well-informed objective research that shines a light on a problem that has caused confusion,” Grafton said at the time. “There has been a lot of scare-mongering and uncertainty for tenants, landlords and insurers.” Grafton said the clean-up Standard NZS 8510 was a good step forward for raising levels and creating a separation between the testers and the clean-up companies to resolve conflicts. However, he noted, it is clear that more needs to be done to improve the analysis of health implications. “It will be important that there is a single level that applies across all regulation including the update of the existing standard,” he added. The next step for the industry will be the Residential Tenancies Act amendment bill, which is currently before Parliament. If passed, the bill will allow methamphetamine regulations to be made under the act, which would be legally binding. The Ministry of Business, Innovation and Employment has said the standard, and the Gluckman report, would be considered when developing the regulations. In the meantime, there are several ways property owners and landlords can lower the methamphetamine -contamination risk. Some ways to do this include: • Testing new homes for methamphetamine contamination before a sale goes unconditional; • Practise due diligence when it comes to reference checks for all adult tenants; • Making sure there is regular, documented inspections of property; • Advising tenants there will be meth testing taking place. Based on the Gluckman report, however, property owners need only to test a property if the police have advised you it was used to manufacture methamphetamine, or if the property owner has good reason to suspect very heavy use in the property. Gluckman recommends an initial screening method called a rapid test, which can be purchased online and carried out by any homeowner and will serve as an initial indication only. The Prime Minister has previously stated there will be no compensation for people who spent thousands of dollars unnecessarily clearing their properties of methamphetamine residue.
HUMANS of Kevin Horrack celebrates 50 years! K
evin Horrack, a keen footie man (and recently lawn bowls!) celebrated 50 years with NZI on 1 September. We caught up with him to find out his secret to a long and happy insurance career. “I landed in insurance because I was good with numbers. I had two interviews – one with Westpac Bank and one with South British Insurance. I was offered the position at South British Insurance and here I am 50 years later with NZI, who acquired South British in 1981. “I was only 17 when I started so I was nervous, but I remember how I was accepted by the team - especially by the manager who ended up having a major influence on my career for the next decade. I was so lucky that he took an interest as I’m doubtful I would have continued without that support.” Kevin started out as an office junior but was quickly promoted to claims officer. Then, due to the mentoring his manager gave, Kevin took roles across most of the business, including underwriting, reinsurance, accounts, processing and being a branch manager. “NZI has been great as I’ve been able to work in different roles and places, including Nelson, Christchurch, Dunedin, Hamilton, Rotorua, plus a three-year secondment as a technical advisor in Indonesia.” Kevin currently works as a team manager in broker claims and has a lot of respect for the work brokers do and the relationships between brokers, customers and NZI. “Relationships are important to me – in all parts of my life. I’m a keen sportsman and even though I don’t play anymore I like to give back to the rugby community – it gave so much to me when I was young. I’m currently a life member and treasurer for Fraser Tech rugby club in Hamilton, plus I’m the treasurer at my local bowling club.” In celebration of his 50th anniversary Kevin had a catch-up
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with friends from the broker community and NZI, plus he and wife Sandra are off on a South Island adventure. Even after 50 years Kevin is still challenged and stimulated by the insurance industry. Besides the satisfaction he gets from solving problems and having his own thinking challenged, he really enjoys the people side of things. And Kevin’s advice for a long career in insurance? “Just be yourself. Find someone that takes an interest in your career and use them as a mentor. Be prepared to take some risks and back yourself as you’ll meet some great people. But most of all, enjoy the experience and maintain your humour.”
FEATURE
nzi.co.nz www.covernote.co.nz
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COVER STORY
ROGUE EMPLOYEES Cyber threats aren’t just from hackers outside your business.
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he greatest threat to your company and network is not the hackers and crackers on the outside trying to get in but your own employees who want to cause mischief or who inadvertently cause damage from within. A determined “rogue employee” can severely harm an employer and inflict substantial damage by: • Vandalising company property • Destroying computer files • Embezzling money • Starting a social media campaign to defame the company • Ruining your reputation • Shredding important records and documents • Reporting you to the authorities/regulators • Calling emergency services to report suspicious package to disrupt business. • Stealing trade secrets (i.e. client information, codes etc.) and sharing with rivals • Causing the company to incur expenses or liability A rogue employee is someone who has stopped complying with the company policies and is behaving in an unscrupulous manner. This often happens when an employee is faced with professional or personal struggles. The employee might start abandoning their tasks and 14
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responsibilities and commit fraudulent activities for monetary gains or to wreak revenge on their employer. There are five basic types of “rogue employees” 1. AMBITIOUS, RESOURCEFUL AND INDEPENDENT INDIVIDUALS These rogue employees stay up all night to find a way around the rules and procedures. They are intelligent, cunning, driven and motivated and are especially dangerous to an organisation because they are so capable and resourceful. 2. DISGRUNTLED EMPLOYEES/REVENGE-SEEKERS They hold a grudge and wish to harm the organisation. When they quit or are fired they may steal proprietary information and leak it or cause damage to the organisation by contacting suppliers, shareholders, authorities, regulators etc. Often exemplary employees can very quickly turn into hostile disgruntled employees as a result of a change in manager, passing over for a promotion or changes to working conditions. 3. NEGLIGENT EMPLOYEES These employees disobey rules and protocols because they are incapable of understanding and following them or are lazy or reckless. These are the employees who leave their login IDs and passwords on sticky notes posted to their computer monitor, share sensitive information
COVER STORY
THE INSIDER THREAT in emails, leave client lists or confidential presentations on whiteboards in meeting rooms or forget company laptops, phones or documents on public transport without thinking or realising they are doing it. They are not trying to maliciously harm the business they just have no idea how dangerous their behaviour can be. Not all “rogue” activities have malicious intents. In fact the unintentional rogue activities are a greater risk to an organisation and represent an even more common problem than the intentional ones. Unintentional rogue behaviour is random and therefore very difficult to plan for. Steven in accounting who does not have the necessary training can cause much more damage than his neighbour Stephanie who has been scheming against the company for years. Lack of training can lead to inadvertent rogue behaviour because users feel overwhelmed. An insurance industry report suggests that as much as 80% of cyber liability claims come from employee negligence, including acts by rogue employees. According to the US Bureau of Labor Statistics, on average 900,000 people in “Professional and Business Services” separate from their job each month. From a sample of these people Osterman Research concluded that 89% retained access (login and password) to at least one corporate software application from a former employer. The apps included: • File sharing tools (DropBox and Google Drive)
• Finance (such as Paypal) • Customer Relationship Management (i.e. Salesforce) • Website and IT Services (Google apps, MS office) Particularly alarming was the fact that 45% of these past employees could access “confidential” or “highly confidential” data. Almost half had accessed ex-employer accounts after leaving the company. 68 % admitted to storing work-related materials in their personal cloud storage services and 60% were not asked for their cloud credentials when they left the company. Some companies have instituted “bring your own device” and “bring your own software” policies before fully appreciating the growing risk. Many small and medium sized business in particular also lack stringent IT policies. 4. EMPLOYEES WITH SECRET POLITICAL AFFILIATIONS AND LOYALTIES This is the realm of espionage which is well documented, especially in the domains of military projects and industrial/IT developments. Male rogue employees are stereotypically high-flying men (Kim Philby) or so-called grey mice (Rudolf Abel). Female rogue employees are stereotypically glamorous women (Mata Hari, Anna Chapman). However, in reality anybody can be a rogue employee, ranging from a sophisticated art expert employed by the British royal family (Anthony Blunt) to the www.covernote.co.nz
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COVER STORY
nice 87-year old lady next door (Melitta Norwood – inspiration for the new film “Red Joan”). 5. EMPLOYEES WITH MENTAL HEALTH ISSUES These employees can cause harm to themselves, their colleagues and the organisation. LET’S LOOK AT SOME EXAMPLES OF ROGUE EMPLOYEES AT WORK AND HOW THEY CAN IMPACT YOUR BUSINESS… PAPERING OVER THE CRACKS … A sacked system administrator in the US was jailed in 2017 for hacking the control systems of his ex-employer and causing over US$1 million in damage. Brian Johnson of Baton Rouge Louisiana had worked for years at Georgia-Pacific paper mill, a company with 200 facilities across the US and 35,000 employees. On Valentine’s Day in 2014 he was let go and spent the next two weeks riffling through the company’s systems and causing havoc from his home. He still had access to the company’s servers via VPN and was able to install his own software. In two weeks’ he caused an estimated US$1.1 million in lost or spoiled production. The timing of the attack aroused suspicion. Thirteen days after he was fired the FBI raided his home and found a VPN connection into the company’s servers on his laptop. A subsequent forensic investigation of his hard drive and broadband router revealed sufficient evidence for a conviction.The Louisiana District Court sentenced him to 34 months in prison and ordered him to repay the damage caused. EMPLOYEE TRIES TO DE-RAIL HIS COMPANY Christian Grupe worked as an IT administrator at the Canadian Pacific Railway (CPR). In December 2015 he was suspended for 12 days of insubordination and not making the grade as a systems admin. When he returned to the office he was told he was being let go. Rather than being fired he persuaded his employer to let him resign and he left after signing a resignation letter. He agreed to return his laptop, remote access authentication and access badges. However, two days later he decided to use his company notebook to log into CPR’s computer network and remove administrator level accounts, delete certain key files and change the password for other accounts on the networking hardware. He then wiped the laptop, destroyed all logs to cover his tracks and handed back the computer. In January 2016, IT staff tried to log into the switches but found they were locked out. According to court documents, part of the system went down, staff were forced to re-boot and factory reset all the switches to regain access to the equipment. Forensic experts found evidence of Grupe’s meddling in the switches’ memory storage. Grupe was charged with intentional damage to a protected computer and the Court found him guilty and in 2018 he was sentenced to a year in prison. STICKING THE BOOT IN A former IT administrator working at a cowboy boot manufacturer in Texas pleaded guilty to hacking the servers and cloud accounts of his employer after being fired and removed from the building. Joe Venzor was let go in September 2016. He became “volatile” and it took staff an hour to remove him from the building after his meeting with the IT Director. As a precaution, Venzor’s access rights were revoked as he left the building. However, an hour later an “elphaser” administrator account logged into the company’s network and shut down the corporate email server, followed by its application server, which ran, the main production line. The attacker deleted files on the server to block any attempts of a reboot and then shut down or changed the passwords to the company’s cloud accounts. Very soon the entire company’s IT infrastructure was 16
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under attack. The IT director investigated Venzor’s work email account and discovered he had sent a document containing a list of network access codes and passwords for various IT subsystems, listed in the same order as the company’s accounts were hacked to his private email address. Using the list the director got ahead of the hacker and began changing passwords himself to mitigate some of the damage.This was only partially successful and after 3 hours of trying to get the servers back online, manufacturing and administrative staff were told to go home. The attack was so effective that the company had to purchase a new server and reinstall all the software on it. Outside IT staff needed to be brought in to sort out the mess and the company claimed it lost $100,000 in new orders in addition to the extra IT costs. During the cleanup, investigators discovered that Venzor has set up the elphaser account from his work computer, which no-one else had access to. The account was designed to look like an innocuous service account but had full admin privileges where none were needed. He was arrested by the FBI shortly after the attack and was charged with unauthorised intrusion upon protected computers. He faces up to 10 years in prison and a US$250,000 fine plus reimbursing the costs of his previous employer. TICK TOCK In 2009 a computer engineer who worked for US mortgage giant Fanny Mae planted a logic bomb – a malicious code set to damage the company’s network on a certain date – after he was fired.The logic bomb which would have shut down the company for a week was discovered before it could go off. The engineer, Rajendrasinh Babubha Makwana was sentenced to three years in prison. INTELLECTUAL PROPERTY According to SANS Institute, a non-profit cybersecurity research organisation disgruntled employees or ex-employees are responsible for two-thirds of all intellectual property theft. This problem is especially pronounced during economic downturns when companies fire employees but fail to cut off their access to corporate networks. Rogue employees can be more dangerous than hackers because they have more time to wreak havoc. Research by Carnegie Mellon University suggests that it takes companies on average nearly three years to notice an employee is stealing secrets – can you imagine how much damage has been caused in this time? Malicious insiders are already able to access sensitive information as part of their jobs, so no alarm bells go off. In many cases the very person who is responsible for monitoring the company’s computer network for suspicious activity is the rogue employee himself. According to a survey of IT Professionals by Security firm AlgoSec although hackers and other external threats receive a great deal of attention it is the internal threat which is the greatest risk. A report by Krall confirms that “moles, opportunists, contractors, disgruntled employees and ex-IT personnel all currently pose a greater risk to corporate intellectual property than statesponsored hacking.” OUTFOXING FOX The famous case of Mathew Keys, the disgruntled editor, who was behind the hacking of the Los Angeles Times website highlights the fact that the disgruntled employee is not necessarily the hacker himself. Often he facilitates others. Keys used his access as a former employee of the company to help a hacker deface the website in 2010. Keys who was in charge of social media for Fox 40 in Sacramento wrote on his personal blog after he was fired that Tribune Co was a “bankrupt news organization that didn’t value its employees on the assembly line.” Keys later entered an online chatroom with members of Anonymous and specifically asked if anyone was interested in defacing Fox or the LA Times and then passed on the username and password.
COVER STORY
DATA PROTECTION VICARIOUS LIABILITY FOR ROGUE EMPLOYEES The recent UK case of WM Morrison Supermarkets Plc v Various Claimants highlights how companies may be held vicariously liable for the actions of their rogue employees. The action brought by a large number of data subjects against their employer, Morrison Supermarkets (Morrisons), as a result of the criminal actions of a former disgruntled employee, Andrew Skelton. Skelton, stole personal data (including name, address, gender, date of birth, phone number, national insurance number, bank details and salary information) of almost 100,000 Morrisons employees and deliberately downloaded the information on to a file-sharing website. Skelton had obtained the data through his position as a senior internal IT auditor at Morrisons. He had become aggrieved with the company following disciplinary proceedings relating to his misuse of the company's postal service, and sought to damage the company's reputation through the data breach and by alleging that Morrisons had failed to comply with their obligations under the Data Protection Act (DPA) 1998. As well as illegally posting the information online, he sent copies of the data to three newspapers, one of which alerted Morrisons, who in turn contacted the police. Skelton was later arrested and sentenced to eight years' imprisonment. The affected data subject claimants argued that Morrisons should be held vicariously liable for Skelton's misuse of personal information, breach of confidence and breach of its statutory duties under the DPA. At first instance, the High Court held that Morrisons had not breached its primary duties under the DPA, but found it vicariously liable for Skelton's actions. The Court of Appeal agreed with the High Court, and held that: • The legislative regime imposed by the DPA did not exclude claims for vicarious liability. • Although Skelton had the intention of harming his employer, there was both an unbroken thread that connected his employment to the unlawful disclosure, and a seamless and continuous sequence of events that lead to the data being leaked. Skelton's actions were, therefore, carried out during the course of his employment by Morrisons, which was deemed vicariously liable. IMPLICATIONS OF MORRISON SUPERMARKETS Morrisons is appealing to the Supreme Court, which will have the final say on its potential liability. For now, the decision will be of concern to employers whose staff handle personal data. Despite the fact that the data breach arose solely from the acts of a rogue employee, Morrisons was still held to be vicariously liable. The courts considered only liability and did not determine the quantum of loss. There were around 100,000 Morrisons employees who could potentially have a claim for damages for the distress of having their personal data released (there was no suggestion that any of employees suffered financial losses). Even with a nominal damages award of £100 for each claimant, this results in an aggregate exposure to Morrisons of around £10 million. But a more realistic award is likely to be in region of £1,000+ per claimant, which results in a potential of exposure for Morrisons of more than £100 million. In addition to the liability exposure to third parties, the potential penalties under the EU General Data Protection Regulation (GDPR) for data breaches (€20 million or 4% of global turnover, whichever is the higher) are significantly higher (previously the maximum fine was £500,000). The decision highlights the growing importance of cyber insurance to reduce exposure from third parties as a result of a data breach. The availability of insurance was raised by the Court of Appeal in Morrison
Supermarkets, where the employer argued that it was unjust for it to be held liable for excessive sums when the breach was not its fault. The Court of Appeal's response to that submission was that "the solution is to insure against such catastrophes; and employers can likewise insure against losses caused by dishonest and malicious employees." Insureds should, therefore, consider whether they are adequately protected by their existing insurance programmes for risks arising from data breaches, including those that arise from employees WHAT CAN EMPLOYERS DO TO PREVENT OR MITIGATE POTENTIAL DAMAGE FROM ROGUE EMPLOYEES? 1. Establish clear written expectations relating to employee departures. Draft policies and incorporate specific terms into employment contracts about the obligations of departing employees, such as confidentiality, fidelity, mutual trust and return of company property (office keys, hardware, passwords etc.) and non-solicitation of employees/customers. 2. Have a clear exit strategy which reflects the employee’s role in the business, the information/systems they have access to and whether that access has been permanently severed. It may be appropriate to restrict or change the employee’s duties when they are leaving i.e. allocate them more administrative tasks with limited access to useful confidential information which they might use at their next employer. In some situations it may be appropriate to place the employee on paid “garden leave” so they do not have to work their notice period. This may be appropriate where the disgruntled employee could be disruptive in the workplace or jeopardise customer relationships. If the business has any concerns about the potential actions of a departing employee during their notice period invoking Payment in Lieu of Notice clause (PILON) would be the preferred option to terminate the relationship immediately and protect the business. Prevention is better than cure – it is easier and more cost effective for employers to prevent damage or loss by ensuring their employment contracts contain the provisions they can rely on to manage the exit effectively. When employee exits are not managed carefully and professionally employers can encounter many operational difficulties when departing staff decide to behave spitefully. Holding exit interviews can be one way to manage risks and minimise damage pre or post termination. The appropriate steps to take will vary depending on each employee and the scenario. Heavy handling a dedicated departing employee can quickly turn him into an angry, spiteful one. 3. Examining company computers, mobile phones and e-mail accounts to find evidence of improper conduct where the employee has departed under dubious circumstances and working with IT providers to secure data and prevent data theft or sabotage. Employers should ensure they have policies in place giving them the right to monitor and examine the use of the company’s electronic equipment. 4. Lawsuits involving employees gone rogue frequently lack evidence Prior to engaging in expensive and protracted lawsuits, employers should gather evidence proving the unlawful conduct and the harm caused to the business. 5. Time is of the essence – employers should act swiftly when they discover a departed employee has retained confidential information or company property to ensure they do not waive their legal rights and to limit the potential damage. DR. DEXTER MORSE LL.M, M.SC IS DIRECTOR, INDUSTRY RISK MANAGEMENT & INSURANCE INTERNATIONAL AIR TRANSPORT ASSOCIATION (IATA) www.covernote.co.nz
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IFSO SCHEME
VEHICLE INSURANCE: HOW YOU CAN HELP YOUR CLIENTS
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ast year, the IFSO Scheme received over 1000 complaint enquiries about vehicle insurance. By comparison, we receive very few complaints about financial advisers. However, your guidance can significantly improve your clients’ understanding of insurance cover and the claims process. Complaints, and insights from complaints, can be help clients avoid declined claims and future issues. Often insurers and advisers assume clients understand policy wording. One way to demonstrate your value is to check whether your clients do understand their policy: simplify the language, clarify the cover and explain exclusions and the claims process. The best time to understand insurance policies is before you need them.
UNDERSTANDING VEHICLE INSURANCE Remind your clients to:
1. Check the policy While all policies are different, often clients assume they are covered for just about everything. One common question we get asked by clients is why they have to pay an excess. You may be surprised at how many clients don’t understand the limitations on excess provisions in policies.
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Case study 00209471: Paying an excess when it’s not your fault Diane’s* car was stolen and later found damaged. Diane made a claim and asked the insurer to refund the policy excess, as she had not been at fault. She understood the insurer would be able to seek payment from the offender, who had been charged by police. Diane’s policy specified that an excess was payable except in limited circumstances, which involved an “accident with another vehicle”. As the damage was caused when Diane’s car was stolen, rather than damaged in an accident, she had to pay the excess. Complaint not upheld.
2. Check the amount your client is insuring their vehicle for In the event of a total loss, clients can expect their policy to pay out the full sum insured. Many won’t appreciate the difference between agreed and market value policies. Taking a moment to explain this to clients could save them a nasty surprise at claim time. Clients who disagree with the sum insured, or the value put on their car if it is a total loss, should be encouraged to get an independent valuation to support their challenge to the insurer.
IFSO SCHEME
Case study 00209788: Car written off, pay-out less than expected Kelly’s* car was damaged in an accident. The insurer assessed repairs at $16,374.85. The pre-accident market value of the car was $6,500, which the insurer then increased to $7,500 to take into account the new alloy wheels. Kelly believed the claim should be settled for the $10,500 sum insured (as specified in her policy schedule), not the $7,500 market value. The policy said the maximum the insurer would pay is the lesser of the sum insured or the market value. In this case, the market value of $7,500 was less than the $10,500 sum insured. Complaint not upheld.
3. Check the car, warrant, tyres Many car owners don’t appreciate that, if their car does not have a warrant or is generally unsafe or unroadworthy, then a claim can be declined. A simple reminder to clients in your newsletter or on social media might make all the difference. Case study 112531: No tyre tread, no cover In March 2007, Charles* insured his Subaru Legacy. In May, he lost control in wet weather and crashed it. He made a claim, and his insurer’s assessor confirmed the car was a total loss. After the accident, the police issued Charles with infringement offence notices, which included
reference to “operating a vehicle with a smooth tyre”. Reports from the police, the assessor and the tyre specialist confirmed one of the tyres had barely any tread. Having a warrant, which the vehicle did have, doesn’t automatically make a car warrantable at the time of the accident. The vehicle’s owner is responsible for ensuring it is safe and roadworthy. Charles’s claim was declined due to a policy exclusion which says there is no cover if an accident occurs when the car is not in a safe or roadworthy condition. Charles argued he didn’t know about the tyre, and it didn’t cause the accident. However, there was enough evidence to show he did know, or should have known, about the smooth tyre and it contributed to losing control of the car in wet weather. Complaint not upheld.
4. Tell all and tell the truth Many clients don’t understand their obligations to disclose all material information when they arrange insurance. We see many cases where claims are declined, because clients didn’t disclose because they forgot, or because they thought the information wasn’t relevant. Equally, some do not appreciate the consequences a “white lie” can have on a claim and their future insurability. Your role is key in helping clients understand why they must disclose everything and always tell the truth.
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5. Drive carefully and safely and comply with licence conditions “Drive carefully and safely, be aware of alcohol limits, and stay within your licence conditions or your insurance company may not pay out if you make a claim” is a key message for clients. If learner or restricted licence holders are in breach of their licence conditions when an accident occurs, they (or, in some cases, their parents) will have to pay for the damage - not only to their own car, but to the other car or property. Case study 130105: Teenage son flips parents’ car, restricted licence, no cover Simon*, who was on a restricted licence, crashed his parents’ car. He got distracted by a noise coming from the gear box, the front wheel caught the side of the road and the car flipped on its side. Simon’s sister Denise*, who also had a restricted licence, was in the passenger seat. The claim was declined because, at the time of the accident, Simon was driving outside the conditions of his restricted driver’s licence. Simon’s parents argued the exclusion shouldn’t apply, because the breach didn’t cause or contribute to the accident. But there was no evidence to contradict the conclusion that a suitably 20
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qualified driver in the car could have helped prevent the accident. Complaint not upheld. Case Study 138950: Stan’s expensive unsupervised drive One night after 10pm, Stan* was driving a car owned by his family Trust when the car in front of him stopped suddenly at a pedestrian crossing. The resulting collision damaged both cars. The Trust made a claim, which was declined, as Stan was driving in breach of his restricted driver’s licence, without a suitably qualified driver after 10pm, and this was excluded from cover. The law states that if the breach of licence did not cause or contribute to the accident, insurers can’t decline the claim on the basis of this exclusion. However, it’s up to the insured to prove, on the balance of probabilities, that the breach of the licence did not cause or contribute to the accident. In practice, this can be difficult to prove. In this case, the Trust said Stan was an experienced driver, and the breach did not cause or contribute to the accident. The IFSO Scheme case
manager accepted that Stan’s accident may still have occurred with a suitably qualified driver present. However, on the balance of probabilities, a suitably qualified driver could have assisted Stan by: • identifying and navigating the pedestrian crossing hazard, particularly when he was driving in an unfamiliar area at night • being a second set of eyes, alerting Stan to the stopped vehicle in front of him. The Trust had not proven, on the balance of probabilities, that Stan’s breach of licence did not cause or at least contribute to the accident. Complaint not upheld. Case Study 114343: Blood alcohol excess, excluded from cover After attending a function and drinking some beer and a bourbon and coke, Tim* had an accident, injuring himself and damaging his car. Tim’s wife’s claim for damage to the car was declined because Tim was over the legal blood alcohol limit, which was specifically excluded by the policy. Tim argued the road conditions and visibility were poor and he was not driving in excess of the speed limit. However, the ESR report said Tim’s blood alcohol level was more likely than not to have impaired his driving ability. Tim had not proven, on the balance of probabilities, that his blood alcohol level did not cause or contribute to the accident. Complaint not upheld.
*Not real names
Case study 13114: A car bumped into me – ah, no it didn’t! Mr and Mrs Jones* held third party liability insurance and Mr Jones made a claim after his car was damaged, as he said another car hit him from behind. His insurer told Mr Jones that as he only held third party insurance cover, any repairs would have to be paid by the other driver’s insurer. Roger*, the other driver, told his insurer he was involved in the accident, but he didn’t hit Mr Jones from behind; rather, Mr Jones came to an abrupt halt at an orange light causing Roger to drive into the rear of the car. A claim was lodged with Roger’s insurer for liability only. When Roger’s insurer appointed an investigator to make enquiries, Mr Jones asked for the claim to be withdrawn, but it wasn’t his claim to withdraw. Mr Jones contacted the insurer and admitted to telling a “bit of a lie” in the original claim. But it was too late. The insurer cancelled the policy and a red alert was placed on the Insurance Claims Register (ICR) against both Mr and Mrs Jones, as they were joint policyholders. Complaint not upheld.
FEATURE
Your business may face cyber threats. It takes a partner at the forefront of the cyber curve to help you prepare, respond and recover from the attacks. AIG can guide you through this ever-evolving, 24/7 world. A world that never sleeps. So, we’re always on.
Learn more at AIG.co.nz/cyberedge Insurance products and services are provided by AIG Insurance New Zealand Limited, a subsidiary of American International Group, Inc.
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FEATURE
DO BROKERS AND INSURERS OWE CONTINUING DUTIES OF CARE? by Andrew Horne and Nick Frith, of Minter Ellison Rudd Watts
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recent case indicates that insurance brokers and insurers may owe a continuing duty to inform customers if circumstances change during the policy term. This will be of interest to brokers and insurers who may have assumed that they need to consider their customers’ interests only at policy inception and renewal time. This claim involved a house that was damaged in the September 2010 and February 2011 Canterbury earthquakes. The owner, Ms Brindson, had since 2001 insured the house under a sum insured policy with Vero Insurance, arranged by her broker, Mr Beazley. Prior to that, she had full replacement cover with a different insurer. Ms Brinsdon received annual renewal notices with key policy details, including the sum insured, which was automatically increased each year. Crucially, the renewal on 12 December 2010 took place between the September 2010 and February 2011 earthquakes. Ms Brinsdon lodged claims with EQC and Vero for both events. EQC
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declared the claims over cap in August 2013. The cost of repairing the earthquake damage was found to exceed the sum insured in the policy. In March 2015,Vero offered to settle the claim for what appears to be a sum insured payment for the February 2011 event.The September 2010 event remained under the EQC statutory cap. THE CLAIMS In September 2017, Ms Brinsdon sued Mr Beazley, claiming that her house was under-insured due to his defective advice at both inception and the renewal of her policy. She later joined Vero on the basis that it was vicariously liable for Mr Beazley’s failures. Both defendants applied to strike out the proceedings on the basis that they were out of time for statutory limitations purposes. Ms Brinsdon accepted that her claims were brought outside the primary six year limitation period. However, she contended that the limitations period should be extended because of equitable fraud or because she had late notice of the claims. The Court recorded that the cause of action in
FEATURE
negligence might be said to have accrued on 28 September 2014, when a building contractor provided Vero with its estimate of the cost to repair, which exceeded the sum insured. Prior to this, it could not have been said that she had suffered any loss, as it was not known whether her sum insured was inadequate. DUTIES OWED BY BROKERS AND INSURERS Both Mr Beazley and Vero accepted that there was an arguable case that Mr Beazley (and Vero vicariously) owed Ms Brinsdon duties of care on the inception and renewal of the policy. However, they denied that those duties continued after renewal, and said that this meant that the claims were out of time: …THEY TAKE ISSUE WITH THE CONTENTION THAT THERE IS AN ARGUABLE CASE OF ONGOING DUTIES OF CARE SUBSEQUENT TO THE LAST RENEWAL OF 12 DECEMBER 2010. THEY ALSO SAY THAT THE GROUNDS FOR POSTPONEMENT AND/OR LATE KNOWLEDGE HAVE NOT BEEN MADE OUT. IT IS FURTHER SAID THAT THE PLAINTIFF’S CLAIM FOR ONGOING DUTIES OF CARE SUBSEQUENT TO THE LAST RENEWAL, AS YET NOT PLEADED, CONSTITUTES A FRESH CAUSE OF ACTION AND THAT THIS TOO MUST FAIL ON LIMITATION GROUNDS. AN EXPANSION OF DUTIES OF CARE? The Court identified the following four issues in deciding not to strike out Ms Brinsdon’s claims: 1. DUTY OF CARE Is there an arguable case that the defendants owed ongoing duties of care, after the last renewal of the policy in December 2010, to keep Ms Brinsdon informed? The Court found that Ms Brinsdon was asserting the existence of a novel duty of care, but acknowledged the rule that courts should be slow to rule on novel categories of duty of care at the strike-out stage. The Court also saw the timing of the alleged breaches of duty as relevant, as they occurred between the September 2010 and February 2011 earthquakes. The Judge said that, while there might be merit in the defendants’ objections to the imposition of the alleged duties, that was a matter for trial. The Court then held that Ms Brinsdon had (our emphasis) “… established a tenable case that the defendants owed ongoing duties of care to ensure and/or advise about the adequacy of insurance cover.” 2. LIMITATION EXTENSION Had Ms Brinsdon demonstrated an arguable case for an extension or postponement of the limitation period under s 28(b) of the 1950 Limitation Act, on the grounds of equitable fraud? Was there an arguable case that the defendants had a duty of disclosure and that the failure to disclose was wilful? The Court concluded that Ms Brinsdon had established a tenable basis for postponement of the limitations period on the grounds of equitable fraud. The Court held that it was: … REASONABLY ARGUABLE THAT THE DEFENDANTS KNEW THAT MS BRINSDON WAS UNDER A MISAPPREHENSION AS TO THE SCOPE OF THE COVER. THEY ALSO KNEW THAT SHE HAD NOT BEEN ADVISED AS TO THE SCOPE AND ADEQUACY OF COVER PRIOR TO OR SUBSEQUENT TO THE RENEWAL IN DECEMBER 2010, AND IN PARTICULAR DURING THE PERIOD FOLLOWING THE FIRST CANTERBURY EARTHQUAKE (SEPTEMBER 2010).
And that: 3. LATE KNOWLEDGE CLAIM THERE IS A TENABLE CLAIM THAT THE DEFENDANTS KNEW MS BRINSDON WAS NOT AWARE OF THE LIMITATIONS OF HER POLICY AND THEY DELAYED TAKING ACTION TO INFORM HER OF THE CORRECT POSITION WHEN THEY KNEW THAT THE POLICY WOULD NOT COVER THE FULL COST OF REPAIRS OR THAT THERE WAS A REAL RISK OF THAT OCCURRING. Had Ms Brinsdon established the grounds for late knowledge under s 11(2) of the 2010 Act? The Court found that Ms Brinsdon: … DID NOT HAVE KNOWLEDGE, AND IT WAS NOT REASONABLE FOR HER TO HAVE KNOWLEDGE, UNTIL MARCH 2015 OF: 1. THE OMISSIONS BY THE DEFENDANTS TO ADVISE HER ABOUT THE ADEQUACY OR OTHERWISE OF HER INSURANCE COVER THAT SHE SAYS HAVE OCCURRED (SHE BELIEVED THAT SHE HAD FULL REPLACEMENT COVER AND UNDERSTOOD THE DEFENDANTS HAD NOT MADE ANY OMISSIONS); 2. THE FACT THAT THE OMISSION WAS ATTRIBUTABLE TO THE DEFENDANTS; AND 3. THE FACT THAT SHE HAD SUFFERED DAMAGE OR LOSS IN THE SENSE THAT SHE WOULD BE OUT OF POCKET FOR ANY COSTS IN EXCESS OF THE TOTAL SUM INSURED LIMIT.
4. FRESH CAUSE OF ACTION ISSUE Was Ms Brinsdon’s claim for ongoing duties of care a fresh cause of action that ought to have been brought by 26 March 2018 (three years
THE ESSENCE OF THE PLAINTIFF’S EXISTING CLAIMS AGAINST THE DEFENDANTS IN NEGLIGENCE IS THAT, OVER A SUBSTANTIAL TIME PERIOD, DURING WHICH THERE IS AN ALLEGED ONGOING RELATIONSHIP WITH MR BEAZLEY, THE DEFENDANTS WERE UNDER CONTINUING OBLIGATIONS TO ACT REASONABLY AND WITH CARE IN RELATION TO ADVISING MS BRINSDON ABOUT INSURANCE COVER. THE PROPOSED AMENDED CLAIM IS IN SUBSTANCE THE SAME KIND OF CLAIM. THE PROPOSED AMENDED CLAIM WILL NOT BE A SUBSTANTIAL CHANGE (IT IS A QUESTION OF DEGREE) AND IN ESSENCE THE LEGAL BASIS FOR THE CLAIM REMAINS THE SAME. after the late knowledge date of 26 March 2015)? The Court found that the amended pleading of an ongoing duty of care post-renewal in December 2010 would be a fresh cause of action. However: The Court rejected the defendants’ submission that the proposed amended pleading would be out of time. CONCLUSION While the precedent value of this case is limited, as it was a preliminary strike-out application, it is an interesting indication that the Court was prepared to accept that brokers and insurers may owe novel duties of care that extend beyond policy inception or renewal. Brokers and insurers should watch this case with interest. www.covernote.co.nz
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COVER STORY
RISK UNDER THE MICROSCOPE A SEA CHANGE IN PRICING PROPERTY INSURANCE by Andrew Horne and Olivia de Pont, of Minter Ellison Rudd Watts
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ew Zealand’s largest property insurer group recently announced a move towards more risk-based underwriting for property and contents insurance in areas considered prone to natural disasters. These changes will result in premium increases – some of which will be very substantial – for customers in affected areas. While all insurance pricing is risk-based to some extent, insurers have traditionally spread the cost of natural disaster risks evenly across the country. With an increasing focus by reinsurers on the extent to which New Zealand insurers are exposed to risks in specific areas, this is changing. Insurers are now under pressure to ensure they are not disproportionately exposed in high risk areas. Risk-based pricing helps ensure that their insurance books are appropriately weighted to areas and types of risk.
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Currently this shift will affect customers of Tower Insurance and the IAG group of companies, which include the State, NZI, AMI and Lumley brands and provide insurance through ASB, BNZ, The CoOperative Bank and Westpac. Together, these brands provide around half of all property insurance in New Zealand. Vero Insurance has indicated an intention to move to partially risk-based pricing. Other insurers are likely to follow. PREMIUM INCREASES There have been media reports of very substantial premium increases for customers who are viewed as at an increased risk of natural disaster loss due to the location or type of their property. In 2018, one Tower Insurance customer reported that the annual premium on a Karori home had increased from $2,200 to nearly $7,200. More recent
COVER STORY
reports include a premium increase of $15,000 for a house in Fendalton, Christchurch and increases of $12,000 and $5,000 for houses in other areas. Tower informed its customers that property insurance in earthquakerisk areas like Wellington, Napier and Gisborne would be likely to pay the most, but increases have not been confined to those areas or older properties. For instance, an Auckland homeowner reported a premium increase from $2,089 to $3,012 for a Green Bay house built in 2014 and an Auckland investor reported an increase of 40% on another property. Tower initially said that very substantial increases will be confined to a small number of customers. Tower’s Chief Executive, Richard Harding, told media that the majority of customers would not see a significant change, with fewer than 2.5% receiving an increase of more than $250
and only 1% increasing by more than $2,000. While this may reflect only an initial round of increases, it suggests that, in the first instance, substantial increases will be confined to specific properties or areas that are regarded as particularly high risk. Insurers are also withrawing from regional markets, which may have the effect of removing some of the highest premiums from their books. The premium increases will not only be linked to the risk of earthquake. Tower has indicated that pricing of flood insurance will also change according to risk. INSURERS TIGHTEN CRITERIA In addition to premium increases, IAG has indicated that it will be taking a “conservative approach” to underwriting new business in Wellington due to higher earthquake risk. There have been reports www.covernote.co.nz
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COVER STORY
that IAG has tightened its criteria for accepting new risks from the Wellington, Porirua, Wairarapa and Hutt Valley areas. IAG reportedly insures around half of all homeowners in the wider Wellington area so its cautious approach to this exposure may have the effect of constraining supply in this region. WHAT DOES THIS MEAN FOR PROPERTY OWNERS? For some owners, insurance may become unaffordable. Owners of apartments may be hit particularly hard. The premiums at one small apartment complex in Wellington were reported to have trebled since 2016.The owners voted by a slim majority to continue buying insurance. This resulted in an increase in the annual body corporate levy to more than $12,000 per apartment. Going without natural disaster insurance is not a realistic option for apartment owners. This would breach the Unit Titles Act, which requires that body corporates organise full cover, and also the terms of owners’ mortgages. It would also make apartments unsaleable to buyers who require mortgage finance, which is likely to reduce their value significantly. The move to risk-based pricing is also likely to affect values of properties that become more expensive to insure, depending upon the extent of the increase. As significant as the increasing cost of insurance may be, buyers’ apprehensions that an increase in premiums now may
THE GOVERNMENT WAS “A LONG WAY FROM INTERVENTION” BUT INVITED INSURERS TO SHARE MORE INFORMATION WITH CONSUMERS SO THEY CAN BE BETTER INFORMED ABOUT AVAILABILITY OF POLICIES AND RISK-BASED DECISIONS.
foreshadow a reluctance by insurers to provide cover at all in future may have an even greater impact upon property values. Buyers of property will also need a more sophisticated understanding of the specific risks attaching to a property than is presently the norm. Buyers may obtain a copy of the Land Information Memorandum report for a property and look for any risk modelling obtained by the local council for such events as landslips and flooding. They may also wish to take advice from brokers or insurers as to whether the property is likely to be insurable in future. Brokers and insurers will need to be careful to explain all of the risks to their customers, including the risk that insurance may become increasingly difficult to obtain. If insurers move entirely to risk-based underwriting, this could result in whole areas that are earthquake or flood prone or otherwise at risk becoming uninsurable. Some properties are likely to become unsaleable as they become too expensive or impossible to insure. People may become ‘trapped’ in houses or apartments where their insurers are willing to renew their existing cover, but buyers find themselves unable to insure 26
September 2019
the property as a new risk on reasonable terms. WHAT REGULATORY CONSIDERATIONS ARE RELEVANT? While insurers’ conduct towards their customers is under increasing scrutiny by regulators in New Zealand and Australia, this is largely focussed upon life insurance and areas in which large commissions are payable or products are mis-sold. Property insurance has not been a particular area of focus as it is not generally susceptible to these issues. Insurers do not generally owe their customers any duties with respect to pricing or their decisions as to whether they will insure risks at all, provided their conduct does not amount to unlawful discrimination under human rights legislation. Insurers will, however, be conscious of the need to explain these changes to their customers carefully and accurately. WHAT HAS HAPPENED IN OTHER EARTHQUAKE-PRONE COUNTRIES? According to the California Earthquake Authority website, only around 1 million of California’s more than 7 million homeowners have earthquake insurance. California is a known earthquake risk and is believed to be due for a major earthquake within decades. The low up-take of insurance presents a substantial risk for California’s economy. The state legislature first stepped in to address this in 1985 when insurers became obliged to offer earthquake insurance to homeowner customers. Over time, however, premiums increased and eventually almost all insurers ceased offering homeowner earthquake insurance altogether. Accordingly, in 1996, the California legislature set up the California Earthquake Authority (CEA), a non-profit, publically managed, privately funded statutory body which provides the majority of earthquake insurance in California. It offers earthquake cover through insurance companies that are CEA members. Policies have relatively high deductibles, ranging from 5% to 25%. The CEA assesses premiums based upon a range of factors, including the following: • The age of the building • The age of the building • Whether it is constructed from brick or masonry • Whether it has more than one story • Ground conditions • Whether it is up to current code The CEA appears to have enabled those who wish to have earthquake insurance to obtain it, although uptake remains low by New Zealand standards. WILL THE NEW ZEALAND GOVERNMENT INTERVENE? There has been no immediate indication that the New Zealand Government intends to look into a statutory scheme like that in California or otherwise take action to prevent insurance becoming unaffordable. The Minister of Commerce and Consumer Affairs, Kris Faafoi, said in early 2019 that he would continue to monitor the situation, but that he understood insurance companies other than IAG were still offering policies and did not intend to withdraw from the market. The Minister said that the Government was “a long way from intervention” but invited insurers to share more information with consumers so they can be better informed about availability of policies and risk-based decisions. FINAL THOUGHTS In time, it seems likely that premiums will continue to rise for areas that are regarded as high risk. Ultimately, some areas may become insurance ‘black spots’ where property values plummet and calls for Government intervention become increasingly loud. In the meantime, careful consideration will be required by those who choose to invest in potentially affected areas.
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27
FEATURE
ASSISTING A BUSINESS AFTER A WORK ACCIDENT
A
business is facing the “unthinkable” after the death of an employee in an accident. Fire, ambulance and police take control of the scene. WorkSafe inspectors are on their way. Coworkers and friends are shocked and upset. A family is devastated. How can a broker best assist their client immediately after this tragic event? One of the most helpful things a broker can do, according to Vero Liability’s health and safety consultant, Jane Birdsall, is to encourage the business to develop a Crisis Response Plan (CRP) before an accident occurs. “With so much happening in those first few hours, it’s easy for a business to feel overwhelmed by events. Having a simple CRP in place helps a business comply with its legal obligations and respond to the accident in an organised way,” she said. “For most small businesses, the CRP doesn’t need to be complex. It can just cover a few key actions and assign responsibility for each action to a staff member.” COMPLYING WITH LEGAL REQUIREMENTS The Health and Safety at Work Act and its regulations place legal duties on businesses that will often need to be complied with after a work accident. Brokers can encourage their clients to understand what the duties involve and include steps to meet them in the CRP. 28
September 2019
At the outset, businesses are obliged to have an effective emergency plan in place including procedures for evacuation, assisting anyone who is injured and contacting emergency services. Then, once the initial emergency is dealt with, the business needs to decide whether it is required to notify WorkSafe about the accident and “preserve the site”. “Notifications to WorkSafe have to be made as soon as possible,” Birdsall said. “In some situations, for example after the death of a worker, there’s no real question about having to notify. But for less serious accidents, the business will need to work through the legal requirements. WorkSafe has a useful notification tool that helps businesses with this and we suggest brokers encourage their clients to put the link to this tool in their CRP. “Brokers can also suggest that the business includes steps to comply with the duty to preserve the site in the CRP. There’s information about this on the WorkSafe website as well.” CONTACTING THE INSURANCE BROKER Once the legal requirements are dealt with, Jane recommends that businesses include contacting their insurance broker in the CRP. “It’s really important that brokers ask their clients to get in touch with them as soon as possible. The broker can then let the insurer know. “At VL, we will work quickly to appoint an expert health and safety lawyer to represent the insured if it looks like WorkSafe will investigate. CONTINUED ON THE NEXT PAGE...
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This means the insured will get appropriate advice right from the start. “An investigation can be daunting. Having a lawyer to assist reduces the stress on the client. It also helps to protest the business’s interests and ensure nothing is done to jeopardise its position further down the track.” DEALING WITH THE MEDIA Some accidents attract a lot of media attention and it is not uncommon for a business to face incessant media enquiries on top of everything else. A reactive and unplanned response can damage a business’ reputation and could even make its legal position worse. Brokers can encourage a business to draft a generic statement before an incident occurs and include it in their CRP. This can be quickly adapted and released to the media after an accident. “A media statement doesn’t have to be long. Often it might just say that the business is deeply saddened by the event and that their thoughts are with the injured person’s family and friends. A business can also give an assurance that they are working closely with WorkSafe while the incident is being investigated,” Birdsall said. SUPPORTING THE VICTIM AND WORKERS Looking after the victim and/or their family is a non-negotiable for most businesses, and it’s best to plan how this will be done before an incident occurs. A business may choose to assign someone to coordinate victim support in the CRP. This person can then make this their focus and ensure, for example, that someone accompanies the victim to the hospital and the victim’s family is contacted and supported. Workers can also be deeply affected by the injury or death of a colleague and friend. Again, a business may like to consider appointing someone in the CRP with specific responsibility for supporting workers. This might include offering to accompany workers if interviews are sought by
Police or WorkSafe and arranging for counselling and a blessing of the site if appropriate. “Most businesses recognise that looking after victims and workers is the right thing to do. What they may not appreciate is that building and maintaining these relationships will likely have benefits in the long run including if the accident results in a prosecution. “If a victim expresses a positive view about a business after an accident, it may lead to the Court imposing a smaller fine or help to get an enforceable undertaking across the line. And employees who are “on board” are less likely to provide useful evidence for the prosecutor. This means that supporting victims and workers in those first hours is really important and we encourage brokers to make businesses aware of the need to plan for this.” Overall, Birdsall says, brokers can play a key role in helping a business prepare for a work accident. “No one likes to think about someone dying at their workplace, but the reality is that unfortunately, it sometimes happens. If brokers can encourage their clients to prepare through a CRP, a sad and stressful event will be a little easier to cope with.” IN SUMMARY A CRP is a useful way to prepare for a work accident. The CRP can include: • Arrangements for the initial emergency response • Processes for notifying WorkSafe and preserving the site • Contacting the insurance broker • Dealing with the media • Looking after the victim and/or their family • Supporting workers
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31
COVER STORY
Here’s why you need to forget about the competition By Lou Draper
Take a tip from Jeff Bezos and worry less about what others are doing.
J
eff Bezos is not without fault. Yes, he’s the wealthiest human on the planet, and while I can’t confirm where he spends his money, it is hoped he chooses to do some good with it. Regardless of whether his moral compass points due north, there is one thing we are certain of. When it comes to business, he knows what’s up. Each year, Bezos writes a letter to his shareholders explaining the wacky world of Amazon. Business performance is covered in great detail, of course, but he also likes to share some of his thought process around what being in business really means. In his letter earlier this year, he referred to day one and day two of business, and how he is always in day one as that is where the innovation happens. Inspiring sure, but not nearly as groundbreaking as a comment left in his shareholder letter of 2017 which is even more relevant today than it was then. Obsess about your customer, not your competition. When the rubber hits the road in self-employment it can be so tempting to copy-cat what our competitors are doing. If they are doing xyz, we should do it too. And it’s hard to break free from this obsession on what
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everyone else is doing. Sure, we’ve grown up with an encouragement to want bigger, better, more so it’s only natural that this should translate into our businesses as well. And with monster organisations like Facebook helping us to become comfortable with spying on our competitors with their page comparison tools, we’ve ended up hooked on this practice. Bezos says no to that. And I think he’s right. Bezos is 100% focused on his customers. When he expanded his platform for third-party sellers, he obsessed over what tools they needed to be successful selling on Amazon over eBay. Not just transactional tools either. Bezos habit of remaining in day one of his business every day, meant he was constantly in a space of dreaming up bigger, better, more, for his customers. His obsession for third party sellers was bigger than Amazon’s own product lines and his letter to shareholders this year highlights this. When it comes down to it, the size and modality of your office space isn’t what your customers are buying. They aren’t buying your clever marketing tactics, or your stylish Instagram top 9. They are buying your experience in a highly confusing industry. As experts in insurance cover
COVER STORY
you already have something that people need and want. They want security. They want to know their families will be looked after, their income is safe, and that you care as much about their possessions as they do. They want you to obsess over them. Obsess over your customer, not your competitor. Get to know all the details of their lives. New employment or business opportunities. An expanding and growing family. A car purchase, or an RV. A bereavement in their family. Inheritance, investments. When you know what’s happening with your customers you are better able to serve them. And how best will you know to serve your customers? Listening. Actively listen to what your existing customers are saying to you. They might be a new referral jumping ship from their old provider. Listen to why they left. What things really upset them, and why are they now sitting in your office? Becoming a carbon copy of the brokerage this client just left for your office isn’t going to win you the business. Listening to them and obsessing over all the details they give you, will. The other reason why obsessing over your clients is better for your business? Shorten down that sales cycle. I can hear you all groaning. The sales cycle for winning new clients in the insurance industry is impossibly long. There’s the initial meeting, the planning, the follow up meetings, application processing time that can feel like a month of Sundays. And when all that’s done, there’s underwriting time. It’s an enormous amount of work to set up new clients, as it is in most businesses. Ever heard of the term “land and expand”? The reason
why expanding a service for existing clients is so appealing is because the sales cycle is much shorter, and the margins are much higher from that time-saving a new client requires. Of course, as a new insurance brokerage or even an agent in an established organisation, you’re going to need to fill up your book somehow. Networking, raising your profile, and showing demonstrable value through social media are things to focus on, and you should continue to practice these tactics every opportunity you get. A magical rainstorm of clients falling out of the sky pleading to work with you, if you are blessed with such magic, does not make a predictable sales cycle, furnishing you with leads and customers forevermore. And people who are not customers yet, you can still get obsessive over them and their needs, for when they are. Insurance cover is so dependent on life stages and in order to have a new customer sign on the line with you, it might take months or even years. But you stay in that person’s life, and who are they coming to when they do need support around their insurance needs? That’s right. It’ll be you.You’re the one who has shown multiple times that you care. You’ve dropped them a line occasionally. Sent them an article relevant to their interests. Perhaps they’ve signed up to your newsletter and you’ve tailored your content for them. This is what obsession over your customer is. Treating them like they are worth their weight in gold – figuratively, they are! Stop talking. Start listening. Pay attention to what your potential customers are saying, and soon enough they will be ranking high on your books. Obsess over your customer. What your competitors are doing is frankly none of your business. www.covernote.co.nz
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FEATURE
DOIG vs TOWER INSURANCE THE COURT OF APPEAL SAYS NO TO AN ASSIGNED CLAIM by Andrew Horne and Olivia de Pont, of Minter Ellison Rudd Watts
T
he Court of Appeal recently delivered judgment in Doig v Tower Insurance, the latest in a series of assigned material damage claims. We covered the High Court decision last year. This decision is relevant to all material damage claims handlers. It provides reassurance, and a note of caution, when dealing with insureds and their representatives where there is a sale of damaged property. RECAP OF THE FACTS In 2012, the Doigs entered into a conditional agreement to purchase a property which had been damaged in the Christchurch earthquakes but not yet repaired. The vendors were insured under a full replacement cover policy with Tower. It contained the usual clause that Tower was not bound to: “Pay more than the present day value if you have full replacement value until the cost of replacement or repair is actually incurred. If you choose not to rebuild or repair your house we will only pay the present day value.” “You” was defined as the person named in the policy. In anticipation of settlement, the Doigs’ legal executive asked Tower how the property damage claims would be dealt with, in particular: IF THE ABOVE SCENARIO WERE TO OCCUR [I.E. IF THE REPAIRS ENDED UP OVER THE EQC STATUTORY CAP], WOULD TOWER COVER THE DAMAGE UNDER ITS EXISTING FULL REPLACEMENT COVER, I.E. ANY REPAIR WORK REQUIRED OVER AND ABOVE THE EQC CAPS WOULD BE COVERED FULLY BY TOWER AS PER THE CURRENT FULL REPLACEMENT POLICY HELD BY THE VENDOR. The Court of Appeal described this question as hitting “the bull’seye”. The Doigs relied on the following particular words from Tower’s response:
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… IF THE EQC REPAIRS ARE DEEMED OVER CAP, IT IS TOWER’S LIABILITY TO REPAIR THE DWELLING. THE NEW OWNERS WOULD NOT BE REQUIRED TO LODGE AN ADDITIONAL CLAIM AS THE DAMAGES TO THE PROPERTY WERE INCURRED UNDER THE PREVIOUS OWNERS POLICY AND THESE CLAIMS WILL REMAIN OPEN UNTIL THE DAMAGES IN RELATION TO THOSE EARTHQUAKE EVENTS ARE RECTIFIED. … ALL SETTLEMENT WILL BE BASED ON THE PREVIOUS OWNERS POLICY INCLUDING THEIR POLICY COVER AND EXCESS. The vendors assigned their insurance claims to the Doigs shortly prior to settlement. In March 2014, Tower advised the Doigs that, as assignees, “its liability was limited to the pre-loss indemnity value of the house, rather than the cost to replace or rebuild.” In 2016, the property damage was declared over the EQC statutory cap. Tower then determined that the property was not capable of economic repair and that it would need to be demolished and rebuilt. However, relying upon the Bryant principle, Tower asserted that it was only liable to pay indemnity value to the Doigs, because they were assignees – their original insureds had, in selling, chosen not to repair. Tower paid its assessment of indemnity value. The Doigs sued Tower on the basis that they had relied on the statements Tower made prior to settlement to their detriment, by confirming the agreement for sale and purchase for the property. In the alternative, they sought compound interest on their indemnity entitlement. The High Court held that the Doigs had not established that they had acted to their detriment in reliance upon Tower’s statements. It dismissed the Doigs’ interest claim on the basis that Tower’s liability to pay was only triggered when EQC declared the claim over cap.
FEATURE
THE APPEAL The Court of Appeal dealt with three issues: a. Was a clear and unequivocal representation made by Tower? b. Had the Doigs changed their position adversely in reliance on the representation? c. Did the Judge err in his conclusion on interest? That is, were the Doigs entitled to compound interest on indemnity value, if that was the extent of their entitlement against Tower? The Court proceeded on the basis that the law on the assignability of reinstatement insurance claims was as stated in by the Court of Appeal in Xu v IAG and previously in Bryant. This meant, in summary, that a person cannot assign a claim to full replacement under an insurance policy; an assignee is limited to indemnity value. ISSUE 1: DID TOWER MAKE A CLEAR AND UNEQUIVOCAL REPRESENTATION? The Court held that Tower had not made a clear and unequivocal representation that the Doigs would be able to claim the full replacement cost for repairs or replacement, post purchase. There were four reasons for this: a. Tower’s response to the Doigs’ legal executive’s question above was no more than a generic and indicative discussion of the insurer’ responsibility. Critically, Tower said it “cannot agree to the claims being transferred to your client until we receive a deed of assignment” and that a discussion as to specifics was necessary. The Court went on to say that “Assignment was by law in the gift of the insurer, and for the time being that gift was withheld. A deed, and a discussion, were needed”; b. The relevant emails were with the Doigs’ legal executive, who was taken to understand the reservations in Tower’s statements. She had asked a clear question, and received a “cloudy answer”. This is a potentially important point for claims handlers; c. Tower said that its decision, including as to approving any transfer of the vendors’ rights, was contingent on production of a deed of assignment. Matters were not discussed further with Tower, nor was the deed of assignment signed, until after the Doigs were irrevocably committed to the purchase; and d. Care was needed in commercial relations before enquiries made of hird parties (e.g. insurers) should be permitted to shift risk to, in this case an insurer, from the parties to the contract. ISSUE 2: HAD THE DOIGS CHANGED THEIR POSITION
ADVERSELY IN RELIANCE ON THE REPRESENTATION? This issue was moot given the answer to Issue 1 above. However, the Court expressed the view that the Doigs had not suffered qualifying detriment for the purposes of an estoppel arising, for two key reasons: a. The Doigs asserted that they would not have settled if Tower had not provided “confirmation” regarding the relevant claims. However, the Court said that there was no evidence, or legal support, for a right to cancel – the contract was not conditional on assignment and the vendors did not appear to have made an actionable representation as to the assignability of claims; and b. The Doigs had suffered no further detriment than the non fulfilment of departure from the belief or expectation created by Tower’s email. There was no relevant change of position. ISSUE 3: DID THE JUDGE ERR IN HIS CONCLUSION ON INTEREST? The Doigs ultimately conceded that Tower could not be liable for compound interest under the Judicature Act which was in force at the time. They maintained that Tower’s obligation to pay arose a short time after the event giving rise to the loss i.e. 22 February 2011. However, the Court found that Tower’s obligation to pay was only triggered by EQC “making payment”, which was implicit in the policy. EQC declared the claim over cap in July 2016 and Tower made payment in November 2016, which was insufficient to constitute an unlawful delay in breach of the insurer’s obligations. Consequently, even if the Doigs’ claim was viewed as a claim for interest as damages, there was no breach to found such a claim. The claim for statutory interest failed for want of a money judgment. CAUTIOUS REASSURANCE We see this case as reassuring for insurers. It demonstrates that the courts are willing to take a fairly strict approach to statements made to third parties in the claims management context. However, we view the Court’s reliance on the fact that Tower’s emails were exchanged with the Doigs’ law firm as significant. The position, and result, may have been different if the emails were with the Doigs themselves. Insurers ought to take care to set out their position on issues such as assignment clearly. This case is also a reminder that, at least at the time of publication of this issue, we await the Supreme Court’s decision in Xu v IAG. That may of course change the position with respect to the assignability of reinstatement benefits under material damage policies. If so, the Doigs would not, at least in theory, have needed to rely upon Tower’s emails.
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35
OPINION
HOW SHOULD INSUREDS APPROACH CLAIM WHEN FULL EXTENT IS NOT YET KNOWN? English Court of Appeal says a ‘hornets’ nest’ or ‘can of worms’ is a valid circumstance notified under a claims-made policy
By Crossley Gates
T
he English Court of Appeal recently overturned the High Court’s decision in Euro Pools Plc v Royal and Sun Alliance Insurance Plc [2018] EWHC 46. The Court of Appeal allowed the appeal in Euro Pools Plc v Royal and Sun Alliance Insurance Plc [2019] EWCA 808. REFRESHER Euro Pools specialised in the installation of swimming pools. The moveable partitions in one of its installed pools would not rise and fall correctly as designed. The partitions allowed the pool to be divided into smaller pools.The partitions were hollow, allowing air to be pumped into them to force them to rise. Leaks developed in the partitions. Euro Pools thought they could remedy the leaks by placing inflatable bags inside the partitions. It notified its liability insurer of the partition problem as a circumstance. After the liability policy renewed, Euro Pools discovered that the bags did not work and it had to install a more costly hydraulic system instead. The policy provided cover for mitigation costs and Euro Pools claimed for the cost of the hydraulic system as a mitigation cost in the second policy year. 36
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A dispute arose as to whether the claim for the mitigation costs fell to be covered in the first policy year because of the notification of the circumstance, or in the second policy year when the mitigation costs were incurred and claimed for. In essence, the High Court said the notification of the circumstance in the first policy year was limited to the inflatable bag solution. It noted that it wasn’t until the second policy year that the insured discovered this didn’t work, necessitating the cost of the hydraulic system. COURT OF APPEAL Reversing this, the Court of Appeal found that the claim for the mitigation costs attached to the first policy year as a result of the notification of the circumstance in that year. The Court of Appeal found: • The term of the policy deeming a subsequent claim to have been made back in the year th insured notified the related circumstance should be interpreted with a view to its commercial purpose. • A requirement to notify a circumstance that ‘may’ give rise to a claim only requires a possibility of a claim in the future.
OPINION
"... to over analyse th e problem by dissecting every potential cause of th e problem as a different ‘notifiable' circumstance."
• A circumstance can be a “hornets’ nest” or “can of worms” situation where the exact scale and consequences of the problem are not fully known at the time. • Although the insured had to be aware of a relevant circumstance, that did not mean the insured had to know at the same time the cause of the problem or the likely consequences of it. • A claim arising from a properly notified circumstance must have some causal link to the circumstance. A coincidental link alone is not enough. The Court of Appeal said it does not make any difference to the validity of a notified circumstance that the insured does not know the fundamental cause of the problem at the time.The notification will validly cover the defects causing, and the consequences of, the circumstance. The Court of Appeal said it is inappropriate: … to over analyse the problem by dissecting every potential cause of the problem as a different ‘notifiable’ circumstance. As there was a causal connection between the circumstance notified and the mitigation cost of installing the hydraulic pumps, the costs were covered in the year the circumstance was notified.
ANALYSIS We welcome the Court of Appeal’s decision. It confirms that an insured can validly notify general circumstances that may give rise to a claim, without having full knowledge of the cause of the problem or the consequences of it. Once notified, any subsequent claim with a causal link to those circumstances will be covered. It is interesting to note that the insured’s desire to find cover in the second policy year and not the first appears to have been driven by the fact that the limit of cover in the first policy year had nearly been reached. Full cover was available in the second policy year. However, the law must determine the matter objectively and consistently without consideration of levels of cover in any particular policy year. Crossley Gates is a partner at Keegan Alexander. Email: cgates@keegan.co.nz Direct Dial: (09) 308 1809
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37
IFSO CASE STUDY
WHAT REALLY HAPPENED?
A
n insured held insurance on his contents and vehicle. In July 2018, a sequence of events started, which included the taking of the vehicle, and a number of burglaries of the contents. The client reported the loss to the police and made claims to the insurer for the loss. The insurer originally declined the claim on the basis that the insured had provided false or inconsistent statements, meaning that he had not been able to show that the loss occurred, particularly in the way he described it. Therefore, the insurer declined the claim as outside the scope of cover provided by the policy. Alternatively, it relied on a breach of the honesty conditions to decline the claim. The client disputed the decision, on the basis that he had not made false or inconsistent statements. He also raised concerns about the investigator’s conduct. THE CASE MANAGER’S ASSESSMENT When making a claim under an insurance policy, the initial onus is on the insured to establish that he/she has suffered a loss, which is covered by the policy. This is known as a prima facie claim. If the prima facie claim is established, then the insurer is entitled to 38
September 2019
raise an objection to meeting the claim. However, if the insurer wishes to rely on an exclusion in the policy, the onus is on it to establish the application of the exclusion. The case manager reviewed the client’s statements and discussed the situation with the insurer. The case manager believed that the underlying sequence of events he described, when this was analysed, was not materially different. The client clearly had difficulty providing information in a structured way and mixed the timeline of events. However, overall, his information was not inconsistent. The case manager also noted that even if there were inconsistencies, given the client’s health, the insurer might also have difficulty showing any dishonest intent on his part. In addition, the client reported the loss to police, and the vehicle ownership had been changed. Therefore, the case manager was concerned that the insured had not made false statements and there was sufficient information to show a prima facie claim. Following discussions with the case manager, the insurer accepted that he did not make false statements and had proven that the vehicle and some of the contents were stolen. The insurer agreed to accept the claim and settle with the client directly.
IFSO CASE STUDY
TRAILER NOT FULLY ENCLOSED T
he insured had cover for his mobile business assets. In February 2019, he was contracted to water blast a school. The water blaster and its accessories were secured to a purpose-built trailer and stored within a toolbox which was bolted to the same trailer. The trailer was not fully enclosed and had an open top. He left the trailer outside the school overnight. It was secured to a fence with padlocks and chains. However, bolt cutters were used to cut through the padlocks to steal the water blaster and its accessories from the trailer. The insured made a claim for the loss. The insurer determined the trailer was not fully enclosed, so it did not fall within the definition of a vehicle or storage container in terms of the policy. Therefore, the loss was outside the scope of cover and the insurer declined the claim. He disputed this decision, on the basis that he had done everything correctly to ensure the equipment was securely locked. He said it would have been difficult to remove the equipment without the appropriate tools and force would have had to be used to take the items. Therefore, he should have been covered under the terms of the policy. THE CASE MANAGER’S ASSESSMENT Generally, it is up to an insured person to read and understand the terms and conditions of the policy. If the insured is not satisfied or does not accept the terms provided, it is his/her right to seek insurance elsewhere. In 2015, the policy was updated to include the optional policy extension for “theft cover”. Under this extension, the loss for the insured property would have been covered. However, the insured did not choose to add the extension to his policy. The policy provided burglary cover for “sudden and accidental loss”, involving physical evidence of violent and forcible entry into a “securely locked motor vehicle or storage container”. The policy also included the option to add on theft cover as a policy extension. The trailer did not constitute a motor vehicle or storage container within the ordinary meaning of the words. Therefore, the open top trailer was not within the scope of cover provided and the insurer was entitled to decline the claim.
www.covernote.co.nz
39
IFSO CASE STUDY
FOREIGN OBJECT CAUSES PROBLEM
A
client held vehicle insurance with the insurer for his tractor. He made a claim, because a clutch circlip dislodged inside the tractor and became caught in the tractor’s transmission, requiring nearly $18,000 of repairs. The insurer declined the claim, because the policy excluded loss to the engine or transmission systems of the vehicle. His broker argued that the damage was covered, by the policy’s extended cover for loss resulting from “entanglement, ingestion, or entry of any foreign object into [the tractor]” (“the ingestion clause”). He believed that the circlip was foreign to the transmission and the policy did not specify that a foreign object must come from outside the vehicle. THE CASE MANAGER’S ASSESSMENT The broker provided an example of another policy wording, which specifically stated that the foreign object must be extraneous and foreign to the vehicle. He believed that the ingestion clause should be interpreted in his client’s. 40
September 2019
The case manager considered the principles of construction and did not agree that the interpretation of the ingestion clause was unclear, considering the natural and ordinary meanings of the words. The ingestion clause covered damage caused by the entanglement, ingestion or entry of any foreign object into the tractor. The circlip dislodged internally, which meant it came from inside the tractor. The case manager also considered the dictionary definition of “foreign” in the Shorter Oxford English Dictionary (5th edition) (“the dictionary”), which included, “[a]lien in character; extraneous, dissimilar …”. On the basis of the dictionary definition, the case manager believed that, in order to be considered “foreign”, the object must be external to and not part of the tractor. Although the circlip may have been foreign to the tractor’s transmission system, it was not foreign to the tractor. The claim was for damage caused by a mechanical failure inside the tractor; it was not caused by ingestion or entry of any foreign object into the tractor and the insurer was not required to pay the claim.
FEATURE
Conduct,
Culture and
RESILIENCE
IN INSURANCE By Tim Grafton
I
t has been an unparalleled past 12 months of regulatory reviews around insurance and financial services. From the Hayne Royal Commission in Australia to the FMA reviews into the banking and life insurance sectors in New Zealand, and more. In such an environment, it’s important we all reflect on how to achieve good customer outcomes.That’s why for this year’s ICNZ conference, we’re bringing together speakers who can lead a discussion on conduct, culture and resilience in general insurance. Across the insurance value chain, significant investment is underway re-designing systems, processes and remuneration incentives to achieve better customer outcomes. At the ICNZ conference, we will hear the expectations from those who regulate the sector, experts in the field on how we should be going about the job, and from right across the sector on how far we have come and just how far we have to go. We’ve coupled this with a deep exploration of resilience - the ability to adapt and thrive in a world of increasing and emerging risks. Ultimately, it’s resilience that keeps insurance affordable and accessible, without which we cannot support good customer outcomes. The world is changing for insurers. Public trust and confidence right across the insurance sector is fundamental through these changes. Brokers have an important role to play in this, as advisors and intermediaries between insurers and customers. That’s why we have the chief executive of NZ Brokers, Jo Mason, and the head of the Steadfast Group, Rob Kelly, coming along to give the broker perspective on exactly these issues. Taking more time to enquire after customers’ needs and ensure that products are appropriate will help support good customer outcomes. Having a better understanding of customers brings the benefit of being able to provide additional services and advice. Consumer trust is also about being able to see the value of what they are paying for. Poor advice will be weeded out and those who put customers at the heart of what they do will be rewarded. Technology and data analytics will help us all do a much better job of this than in the past. This will place the onus on all links in the distribution chain, from product designers through to the consumer, to work as one.
But it isn’t just customer expectations that are changing.The regulatory environment is being reshaped as well. That’s why we have the Minister for Finance, Grant Robertson, and the Governor of the Reserve Bank, Adrian Orr, coming along to talk about exactly how they see those changes materialising. Against this backdrop, Elizabeth Arzadon, a specialist in cultural risk in the financial sector who developed APRA’s approach to evaluating risk culture in insurers and banks, will take us on a journey about the best way to meet regulatory expectations. Good consumer outcomes aren’t just about the majority, middle of the road customers either.Vulnerable consumers are an important segment of society and need to be considered in all financial advice and legislative changes. Giving these consumers a voice matters, which is why the Chief Executive of FinCap, Tim Barnett, will be attending to walk us through their experiences and help us understand how to meet their needs. We’re also going to be looking at resilience. Resilient buildings, resilient communities and a resilient economy are all intertwined with effective insurance. Effective insurance is insurance that is accessible, affordable and quick to respond. A key part of ensuring our insurance landscape meets those criteria is understanding the world we live in and how that is likely to evolve and change in coming years, as well as how international trends in insurance may impact us. Our afternoon speakers will canvas these topics and provide insight into New Zealand’s emerging future. Finally, we’ll look at two initiatives seeking to provide a way forward to negotiate through the challenges of sustainability and natural hazard risks. Karen Silk, General Manager Commercial, Corporate and Institutional, Westpac and Co-Chair of Aotearoa Circle's Sustainable Finance Forum, a cross-sector group working to develop a sustainable finance roadmap for New Zealand.Then our own chief executive,Tim Grafton, will talk about the Rezealiance initiative, designed to provide a multi-hazard bespoke risk model for New Zealand. Insurers and brokers work to complement each other. We need to be cognisant of the same issues and aim towards the same good outcomes for customers. We think we’ve designed a programme that achieve this and hope to see the broker community well-represented on the day. www.covernote.co.nz
41
ASK AN EXPERT
Risk transfer QUESTION… Our client’s general liability policy contains the following exclusion: "Building defects alleging, arising directly or indirectly out of, or in respect of: 2.1 the failure of any building or structure to meet or conform to the requirements of the New Zealand Building Code contained in the First Schedule to the Building Regulations 1992 or any applicable New Zealand Standard (or any amended or substituted regulation or standard) in relation to leaks, water penetration, weatherproofing, moisture, or any effective water exit or control system; or 2.2 mould, fungi, mildew, rot, decay, gradual deterioration, micro-organisms, bacteria, protozoa or any similar or like forms, in any building or structure." Our client installs equipment on to roofs. An installer drilled holes during a typical installation. The roof subsequently leaked through the holes made for the installation of the equipment. There was damage to third party property arising out of the leak. The insurer has declined the claim for repairing the hole and the third-party damage that resulted from the leak, citing the building defect exclusion. Has the insurer applied the exclusion correctly or should they pay the client’s claim for the damage to the third-party property?
REPLY… CROSSLEY GATES Assuming the installation was contrary to the NZ Building Code or an applicable NZ Standard, the exclusion will technically apply. However, as you will know, the exclusion was introduced in about 2002 to address the leaky building crisis. The trouble is that it was drafted so widely it excludes not only the leaky building deficiencies but also all “normal” deficiencies by tradespeople that result in a lack of weathertightness, even though they are not connected with the leaky building issues. This appears to be a case in point. All I can suggest is that you make this point to the underwriter and seek payment based on this not being a leaky building issue. The exclusion was not intended to defeat these normal liability exposures.
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September 2019
Damage discovered too late QUESTION… A client owns a property in Christchurch. The building suffered some minor damage in Christchurch earthquakes and claim was cash settled. The damage was assessed as plaster and painting only. The tenant now has issues with the sewer pipes blocking and upon investigation from drainlayer the cause is stated as from earthquake damage. Upon cash settlement of the claim in 2013 the insured had to sign a settlement discharge which included the following wording - "the settlement is paid by the insurer and accepted by the insured as full and final settlement and discharge of the claim and any claims, rights , demands, and set offs against insurer arising directly or indirectly out of , or in connection with the earthquake activity and or earthquake losses whether such claims arise under statute, common law, or equity , are in existence now or may arise sometime in the future, are known or unknown, in the contemplation of the parties or otherwise." The discharge is quite clear in that it is a full and final settlement and that legal and technical advice should be sought before signing the agreement. The insured is of the opinion that since the damage to the sewers has only come to attention now that they must have some recourse to claim for this newly discovered damage. It is impossible to establish when the damage occurred so we couldn’t argue that it was a subsequent quake that caused the damage (and if it did the new application of site excess would make the claim below excess). Does the insured have any grounds to extend the settled claim for this newly established damage?
REPLY… KIRSTY SPENDLOW Speaking from a previous claim experience - in our insured's case they accepted the full and final settlement, thinking they were doing a favour to the insurer, on the basis of verbal advice from the loss adjustor. The settlement had an allowance for underground services, however the advice provided was that the insurer would be able to provide further settlement if the actual costs exceeded the estimate, given that the full costs would not be known until the work commenced. Unfortunately when the additional costs were submit to the insurer, they relied on the legalities of the full and final agreement to decline any further costs.The issue went through the disputes procedure to no avail. Additional costs were circa $10,000 so the insured did not pursue further. Appreciate the circumstances are not the same, but hopefully this will give some assistance. REPLY… CROSSLEY GATES I am afraid the words: “Are in existence now or may arise sometime in the future, are known or unknown, in the contemplation of the parties or otherwise” mean what they say. The insured has acknowledged the risk that something unknown may arise later and has agreed to take that risk. That is the effect of those words. I don't believe your client can do anything.
ASK AN EXPERT
Marital property QUESTION… Our client had a car that was insured in his name stolen. The claim was recently settled by payment to his nominated account. His wife has now asked for details of the settlement as she says she is entitled to claim half from him as part of the split of assets. Does the Privacy Act preclude us from divulging this information to her?
REPLY… CROSSLEY GATES Who is your client - the husband or the wife (or both)? Information about the payment of money by the insurance company to the husband is personal information about him. Assuming you act for him alone, you should not release that information to his wife (or anyone else for that matter) without his approval. Yes, the Privacy Act says this. The wife should request this information from the husband direct and if it is not forthcoming, she should seek legal advice about what may be matrimonial property she is entitled to a share of.
Insuring against yourself QUESTION… I have a company who is constructing a building in their own name. They have arranged contract works insurance, but have also asked about defective workmanship. As the building is owned by them, I advised they could not have a liability cover as they cannot hold themselves liable. They have since been advised they should form a new company and that new company could then "own" the building from construction onwards and thus their existing liability would cover them as they are not the same insured. I do not believe that the insurer would accept this as both companies would have common directors and shareholders. What is the legal stance on this?
REPLY… CROSSLEY GATES In short, that sounds like a scheme to hoodwink the liability insurer. While each company is a separate legal entity, and therefore one of them can be liable to the other, the whole arrangement creates a false liability if both companies are effectively owned and controlled by the same people. One of the foundations of insurance is the honesty of all parties.
Boss’s travel goes wrong QUESTION… Hope you can assist on a little travel claim as the insurers are declining based on semantics. Our client has a corporate travel policy in place. Our client makes up part of the executive management team and is a major shareholder. He is not currently one of the four directors as this responsibility is rotated amongst the senior shareholders on an annual basis. The business does not like to use "hierarchical titles" and that is why they rotate the directors annually. Our specific client is in essence the "boss”. Our client went away on a pure leisure trip to Botswana and there was a fire that destroyed the lodge. They only lost a few items to the value of $1500. The claim has been declined under the pure leisure travel definition: Pure leisure travel means international leisure or holiday travel that does not include a business component, undertaken during the policy period by an insured person who is referenced in category (a) on the policy schedule...a) All company directors (including executive and non-executive directors), chief officer, chief executive officer and chief operating officer. This is designed to ensure that not all the employees of the business are covered for every little trip. Now "the boss" is being excluded purely because he does not have a status symbol currently next to his name yet still owns 75% of the business. Is there any way around this? I would appreciate your thoughts.
REPLY… CROSSLEY GATES Assuming your client does not come within the categories of chief officer, chief executive officer or chief operating officer, he may well be a director at law anyway even if not presently named as one in the Companies Office records. This is because of the wide definition of a “director” at section 126 of the Companies Act 1993. It includes anyone occupying the position of director by whatever name called and can even extend to shareholders in certain circumstances.
Do you have a question for our experts? If so, visit iNavigator, www.inavigator.co.nz, or the IBANZ website, www.ibanz.co.nz - and let us know.
43 www.covernote.co.nz
43
FSCL CASE STUDIES
MISSING JETSKI I
n early 2018, the insured’s jet ski stopped working. He took the jet ski to his usual repairer, but they were at capacity, and could not take on the repairs. They recommended another repairer, who was performing repairs part-time, out of his garage. The insured dropped off his jet ski with this amateur repairer. Several months later, the repairs still were not complete, and the insured was becoming worried. After making a few calls and emails and receiving no response, he drove to the repairer’s house. He found the property abandoned, and his jet ski gone. After filing a police report, he made a claim for the stolen jet ski to his insurer. The insurer declined the claim, saying his policy did not cover theft by a person to whom he entrusted his jet ski. The insurer said he had voluntarily given possession of the jet ski to the repairer, so the theft was not covered by his policy. CLIENT’S VIEW The client thought the insurer’s interpretation of the policy was unfair. He said that if theft from a repairer was not covered by his policy, then the policy must be much narrower than the policies offered by other insurance companies. He said almost all marine insurance policies covered damage or theft while a vehicle was being repaired. THE INSURER’S VIEW The insurer said the policy was clear – the insured had entrusted his
jet ski to the repairer, so the theft was not covered. REVIEW We agreed with the insurer’s interpretation of the insurance policy. If he gave possession of his jet ski to someone, and that person stole the jet ski, then the theft was not covered by the policy. We found the insurer had acted reasonably when it declined the claim. We also found that the exclusion was not as narrow as the insured was making out. He had cover if his jet ski was accidentally damaged by a repairer, or if a stranger stole his jet ski from the repairer. The exclusion only applied if the repairer themselves stole the vehicle.We did not think this was unfairly broad, or much different to the policies offered by other insurance companies. OUTCOME We recommended the insured discontinue his complaint. He accepted our recommendation, and chose not to take his complaint any further. No insurance policy covers all risks. It can sometimes feel unfair when you have suffered a loss but are caught out by an exclusion in your policy wording. FSCL cannot overrule an exclusion outright, but we can investigate whether your insurer has interpreted the exclusion correctly, and whether it has applied the exclusion fairly and reasonably.
INSURANCE DOES NOT COVER DAUGHTER’S LAPTOP T
he insured travelled to Australia to spend time with her daughter. One day, she accidentally dropped her daughter’s laptop while she was sitting on the couch. The screen became discoloured and eventually stopped working. The insured’s husband had complimentary travel insurance with his credit card. She decided to claim the costs of repairing her daughter’s laptop from the insurer. The insurer declined her claim because her daughter’s laptop was not covered by their travel policy. DISPUTE The insurer refused to pay for repairing the laptop because the policy only covered damage to belongings of legally dependent children. Because her daughter was an adult who lived independently from the insured, damage to her property was not covered by the policy. The insurer also declined the claim for personal liability claims from “family members”. The insured thought it was unfair and unethical for the insurer to rely on two conflicting sections of the travel insurance policy to decline her claim. On the one hand, the policy did not consider her daughter to be her “child”,
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September 2019
but her daughter did qualify as a “family member” under another section of the policy. REVIEW We reviewed the insurance policy and agreed with the insurer. Children were clearly defined within the policy as being legally and financially dependent on the parent, which the insured’s adult daughter was not. Similarly, the policy clearly excluded liability claims from family members. It only covered damage to a third-party’s property who was not a “family member”. Although “family members” were not defined within the policy, we found that in any ordinary sense of the word, her daughter would be considered a member of her family. While we had sympathy for the insured’s position, we concluded that on a plain reading of the insurance policy, the insurer was correct in declining her claim. RESOLUTION We issued our preliminary decision outlining our view. The insured agreed to withdraw her complaint. Insurance policies do not cover every possible risk or unforeseen event. The level of cover will vary from policy to policy and will be reflected in the premium charged.
Professional
College
PROFILE
Top broker ‘not a salesperson’ This year’s Women in Insurance Broker of the Year winner, Faith Owens from Bridges Insurance in Hamilton, opens up about her career, challenges and chequered success with vege growing. How did you come to be a broker? I started my career working for AA Insurance in Penrose many years ago, and then carried on working in insurance in London in the early 2000s. This included a stint at loss adjusting at Cunningham Lindsay, before moving into brokerage in St Albans, about an hour north of London. Then I then took maternity leave for 12 months, during which time moved back to Hamilton to be nearer my family. I started at Bridges in Feb 2007, and have gone from being a support person for our managing director, to being a director myself.
What are your key strengths?
Attention to detail and really listening when I’m working with a client. It’s important to listen to what they’re saying . . . and also what they’re not saying. I generally form really strong relationships with my clients and some of them have become close friends. Also, I don’t consider myself to be a salesperson, I prefer to help my clients with good advice and matching them with right product for their needs. And I’m lucky to have a really good memory for names and faces.
What are some of the major challenges facing the industry in 2019?
Technology is always a challenge; I believe that brokers are looking for ways to streamline processes and connect with both our clients and insurers in a faster and more efficient manner. We’ve invested quite a bit in technology over the last 18-24 months, and its paying dividends for us now in terms of increased efficiencies, along with cost savings in other areas. There is a lot of talk about diversity in the workplace also. I don’t think that would be considered a “challenge”, but it’s something to be aware of and to factor into decision making. We’ve got a great team at Bridges and are embracing diversity of thought, age, ethnicity and background.
What do you find most rewarding about your job?
Seeing clients feel confident that they’ve got good insurance protection in place, and seeing them have claims paid at the end of a smooth process. Essentially that’s the reason for me doing what I do. I also have a strong mentoring and management role within our team, and I love to see our younger team members learning, growing and developing in their confidence.
What areas do you find most challenging?
Getting everything done in time. Probably one of my biggest faults is not saying “no” often enough. As a result, I often end up with a lot on my plate, so delegation is a skill that I’m working on.
How do you keep ahead of the technological changes in the industry?
Take advice from people who know what they’re talking about in this area. I’m not a tech-savvy person by any means, so I’m comfortable that we’ve got a good team around us, both internally and externally, that know a lot more than I do.About 18 months ago we introduced an online portal for our clients, which enables us to deliver their documentation electronically, and also provides them with 24/7 access to their insurance information. This has been really well received by clients as they’re no longer having to store hard copies of documents year-on-year, and they’re also receiving their documents a lot more quickly than traditional post.
What do you see as the key to your success as a broker? I like people and learning about what makes them tick. I’m a listener more than a talker, so this really gives clients the opportunity to tell me about who they are and what their business is about. I’m also dedicated, hardworking, and just a little bit OTT when it comes to spelling, punctuation and grammar. I also love to learn. I won the QBE IBANZ scholarship back in 2011 to complete my Level 5 insurance qualification, then in 2018 I completed a Diploma in Leadership and Management run by the Australian Institute of Management as part of an NZbrokers scholarship. I’ve been really fortunate that others have seen enough potential in me to grant me these opportunities.
What do you enjoy doing when you aren’t at work?
I’ve got a daughter who is 13 and a son who is 11, so my weeknights and weekends tend to get filled up with hockey, soccer and futsal practices and games. When I get some downtime, I love to read, bake and try my hand at vege gardening, with various degrees of success. I love travelling and try to get away at least twice a year. Earlier this year my husband and I had our belated honeymoon to some amazing far-flung destinations and I’m now looking forward to a week in Samoa with my daughter in October. www.covernote.co.nz
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Professional
Professional Development: Professional IQ College
College
Expectation versus reality of distance learning
T
o a certain extent we all have expectations about future events or occurrences which are in part formed by our beliefs and experiences. If you have not studied by distance learning before you may have some unreal expectations. Online learning provides opportunities and challenges for students and the college. Course costs are very economical without the need of classrooms and you, the student, spend less time travelling, saving on travel costs and time. However, you miss out on the shared experience of having other classmates or one-to-one contact with the tutor. To help alleviate any anxiety concerning contact with the college we have a student liaison team who offers you one-to-one contact and will keep in regular contact with you to answer any queries you may have about your study. To be successful in your study you should understand that everyone has a unique learning preference. Everyone is different and you will have your own way of learning. Some practical tips to help you understand what type of learner you are: • If you are a visual learner, you are likely to enjoy distance learning because you can see the written information provided. This will help you better enjoy, understand and memorise the content. • If you are an auditory learner, you enjoy listening to others and can often remember what people say but can be distracted by class mates or colleagues. Auditory learners also listen to themselves, especially when they repeat information in their heads. • The internet provides us with instant access to information through web browsers and Wikipedia which favours the text based reading/writing learning style. • If you are a kinaesthetic learner, you like physical activities where you can touch material and make things. Whilst you may identify with one of the above learning styles it won’t be your only way of learning. Perceptions, expectations, desires and attitudes all affect your approach to learning. It is important to the college to help you address these expectations. Distance learning enables you to take more ownership of your learning. This means relying more on your own actions rather than instructions 46
September 2019
from having instant access to a tutor. Something I sometimes see is a lack of confidence particularly when submitting that first assessment work. If you have not studied for a long time you might be apprehensive about your work being good enough. Here are a few tips: • The college student liaison team are happy to take your questions • Try not to be too self-conscious about your work • The learning material is provided for you make sure you read it and understand it As a distance learning student, you also need to know technical skills, like utilising the computer and internet to access and download your programme and communicate with the college.Whilst this is not contentspecific the college student liaison team can support you with technical assistance and walk you through the steps required to upload material if you are having problems. Improving your computer skills before you start will of course reduce any apprehension and increase your confidence when accessing and uploading material to the college website. Some students find it a relief that they do not have to interact with a tutor during their study for others this may increase their anxiety because they have less contact. To help alleviate any anxiety the college has provided a chat function whereby you can contact your student liaison person, or you could simply pick up the phone and talk to them directly. Expectations of timelines and responsiveness are equally important to both you and the college. Instantaneous communication responses can occur, but we may not always be able to provide immediate feedback on queries. The important thing is not to let any delay in responsiveness affect your study.
The college student team is here to help and are available from 9am to 5pm Monday to Friday. Contact details: Zeeshan Ahmad Office +64 9 306 1731 Email: Zeeshan@professionaliq.co.nz
June Wang Office +64 9 306 1735 Email: June@professionaliq.co.nz
DATE
TITLE
PRESENTER
WHERE
TIME
COURSE DESCRIPTION
September 11
Up Your Brand personality based personal branding
Natalie Cutler-Welsh
Auckland & webinar
10.3011.30
Discover your personality type and what sets you apart from the rest.
12
Powerfully Persuasive PowerPoint Presentations
Debbie Mayo-Smith
Auckland & webinar
10.3011.30
Do you ever have to prepare a presentation? How about present to an audience? Well you don’t want to bore til they snore do you? You want the presentations to be not only persuasive but interesting and attention grabbing.
17
Jewellery Claims – what does wrong and how to avoid issues
Karen Stevens
Auckland & webinar
11.00 12.00
Clients often find it hard to understand why their jewellery claims are not paid. Looking at complaints about jewellery claims to the IFSO Scheme, this webinar will discuss what the issues are and how you can help clients avoid those nasty surprises.
18
Centre of Influence Marketing: How to Eliminate Cold Calling Forever
Clifton Warren
Auckland & webinar
10.3011.30
Top producers obtain 85 percent of their new business from referral and introduction. During this webinar you will learn where and how- to in powerful developing centres of influences that will provide you with a steady stream of referrals and introductions to keep your sales pipeline overflowing with high quality prospective clients.
25
What can we use in business that comes from NLP and mBIT
Trevor Slater
Auckland & webinar
10.3011.30
Neuro Linguistic Programming (NLP) and Multiple Brain Integration Techniques (mBIT) are two human sciences that are intrinsically linked and provide many skills on human interactions. But how can we use these in the world on financial advice?
3
How to Identify, Target, Nurture Competitors Under Service Accounts
Clifton Warren
Auckland & webinar
10.3011.30
Your best prospective clients are often your competitors under serviced accounts. During this webinar you will learn how to identify, nurture and acquire under serviced accounts to rapidly grow your business. I’ve personally used these techniques to write millions of dollars of new business and produced double digit growth.
8
How To Ease Your Work/ Life Imbalance
Debbie Mayo-Smith
Auckland & webinar
10.3011.30
Distribution and response management - this will save you hours and hours
9
Business Interruption – Claim example – and how well would your client’s cover have performed?
Mark Anderson
Auckland & webinar
10.3011.30
We will discuss a Business Interruption calculation of loss as a worked example.
14
Advisers/ Brokers: Clawback fees – issues and considerations
Virginia Douglas
Auckland & webinar
10.3011.30
Using case studies from complaints about clawback fees, this webinar will discuss the issues for advisers, what to consider when charging a claw-back fee and problems to look out for.
17
Smarter. Faster. Better. Cheaper
Debbie Mayo-Smith
Auckland & webinar
10.3011.30
A cornucopia of wonderful, simple tips and tricks on how to use every day, free Microsoft Cloud apps tools better to achieve freasy (free and easy) gains in income, time management and customer service.
24
Say what you want - hone your message and get it out to your ideal clients
Natalie Cutler-Welsh
Auckland & webinar
10.3011.30
More details to come.
30
Pulling apart the FMA internal complaint process requirements
Trevor Slater
Auckland & webinar
10.3011.30
The FMA are releasing new guidelines on what advisers need to do to have a complaint internal complaint process.
October
November 6
Business Interruption – Insurance of Wages
Mark Anderson
Auckland & webinar
10.3011.30
Different ways to insure wages (including Dual Wages) – and what is best for your clients?
11
How to have difficult conversations
Virginia Douglas
Auckland & webinar
10.3011.30
Clients often find it hard to understand why their jewellery claims are not paid. Looking at complaints about jewellery claims to the IFSO Scheme, this webinar will discuss what the issues are and how you can help clients avoid those nasty surprises.
12
Case Wrap Up for 2019
Karl Robinson
Auckland & webinar
10.3011.30
Update on recent cases from the Court.
19
How to Package Yourself as A Recognised Expert
Clifton Warren
Auckland & webinar
10.3011.30
Competition in the marketplace seems to be increasing by the hour, thanks largely to the proliferation of digital technology and online marketing. Buyers have so many purchasing options that didn’t exist until recently. Unless you’re able to differentiate, you sound like, look like and act like everyone else. This leads to price only selling.
20
Detecting Deception
Trevor Slater
Auckland & webinar
10.3011.30
Have you ever felt that during a conversation or interview the person speaking to you is not telling you everything but you can’t pinpoint the problem?
11.0012.00
With many pets being seen as part of the family, clients can expect that pet insurance will cover every cost of their pet’s treatment. Using case studies from complaints to the IFSO Scheme about pet insurance, this webinar will discuss what are client’s expectations, common issues in claims and how you can help clients avoid feeling disappointed by a claim decision.
27
Pet insurance: trouble at the vets
Karen Stevens
Auckland & webinar
www.covernote.co.nz
47
CONTACTS: IBANZ CORPORATE COMPANY LIST IBANZ BOARD Roger Abel Rothbury Group Limited PO Box 1596 Shortland St, Auckland 1140 Mob: 021 952 230 roger.abel@rothbury.co.nz Tony Bridgman (President) Executive Director Marsh Ltd PO Box 2221 Auckland 1140 Tel: 09 928 3015 Mob: 021 873 399 tony.j.bridgman@marsh.com Craig Buckle National Manager, Corporate Risk Solutions Willis New Zealand Ltd PO Box 369 Auckland 1140 Tel: 09 356 9347 Fax: 03 358 3343 craig.buckle@ willistowerswatson.com David Crawford Director, New Zealand Insurance Advisernet NZ Ltd PO Box is 37670 Market Road Auckland 1151 Tel: 09 926 2062 Mob: 021 905 537 dcrawford@ianz.co.nz
PIQ BOARD Allan Daly Managing Director Avon Insurance Brokers PO Box 3923 Christchurch Mail Centre Christchurch 8140 Tel: 03 3710 301 Mob: 0275 358 128 allan@avoninsurance.co.nz
Angus McCullough General Manager Marketing & Chief Broking Officer Aon New Zealand PO Box 1184 Shortland Street Auckland 1140 Tel: 09 3629059 angus.mccullough@aon.com
Duane Duggan (Immediate Past President) Head of Insurance Legal Crombie Lockwood (NZ) Ltd PO Box 91747 Victoria Street West Auckland Tel: 09 357 4805 Mob: 021 833 286 duane.duggan@crombielock wood.co.nz
Jason Smith Managing Director Property & Commercial Insurance Brokers PO Box 4 Feilding 4740 Tel: 06 323 8820 Mob: 027 293 8724 jase@pcinsurance.co.nz
Jo Mason Chief Executive Officer NZ Brokers Management Ltd PO Box 334 012 Sunnynook North Shore City Auckland 0743 Tel: 09 869 2785 jom@nzbrokers.co.nz
STAFF
Ruth Steele (Vice President) Trevor Strong Ins (2013) Ltd PO Box 302635 North Harbour Auckland 0751 Tel: 09 414 2563 ruth@tsibrokers.co.nz
Fred Dodds Waikanae Mob: 021 998 906 dodds@nzemail.net.nz Angi Mann Contract Compliance and Learning and Development Specialist Auckland Mob: 021 293 1724 angim@financialadvice.nz Jason Smith Managing Director, Property & Commercial Insurance Brokers PO Box 4, Feilding 4740 Tel: 06 323 8820 Mob: 027 293 8724 jase@pcinsurance.co.nz Gary Young Chief Executive, IBANZ Auckland DDI: 09 306 1734 gary@ibanz.co.nz
WANT YOUR VERY OWN COPY OF
Zeeshan Ahmad Student Liaison DDI: 09 306 1739 zeeshan@professionaliq.co.nz
June Wang Student Liaison DDI: 09 306 1735 june@professionaliq.co.nz
Robyn Gosden Finance & Office Manager DDI: 09 306 1733 Mob: 027 275 2477 robyn@ibanz.co.nz
Gary Young Chief Executive IBANZ DDI: 09 306 1734 Mob: 027 543 0650 gary@ibanz.co.nz
Sylvia Heywood Academic Manager Professional IQ College DDI: 09 306 1737 sylvia@professionaliq.co.nz Karen Scard Administration Manager DDI: 09 306 1738 karen@ibanz.co.nz Rod Severn CEO Professional IQ College DDI: 09 306 1736 Mob: 021 749 202 rod@professionaliq.co.nz 48
Stuart Speirs (Vice President) Director Abbott Group PO Box 3086 Christchurch 8011 Tel: 03 366 7536 Mob: 021 358 341 stuart@abbott.co.nz
David Crawford Chair Director, New Zealand Insurance Advisernet NZ Ltd PO Box is 37670 Market Road Auckland 1151 Tel: 09 926 2062 Mob: 021 905 537 dcrawford@ianz.co.nz
September 2019
IBANZ Physical address: Unit 4D, 2B William Pickering Drive, Rosedale, Auckland 0632 Mailing address: PO Box 302504, North Harbour, Auckland 0751 Toll free: 0800 306 173 Website: www.ibanz.co.nz
COVERNOTE? Each issue of CoverNote is packed with vital information, news, commentry and advise for the insurance industry from experts within the industry. To keep abreast with all the issues affecting New Zealand’s insurance broking industry just email robyn@ibanz.co.nz TO ADVERTISE... Contact Robert Johnson on: e-Mail: robert@benefitz.co.nz Phone: 09-477 4702 Mobile: 0274-970-712
CoverNote is published quarterly by IBANZ, the Insurance Brokers Association of New Zealand. All correspondence should be addressed to: CoverNote, PO Box 33-1630 Takapuna, North Shore City, Auckland.
HERE’S WHY
YOU NEED TO
FORGET ABO
UT THE COMPETI
TION
September 2019
INSURERS APPLE WITH METHGR QUESTIONS
Post-Gluckm
an Report, what
comes next for
Rogue employe
insurance compa
nies assessing
contamination
claims?
es - the insid
Next issue is due out: DECEMBER 2019
Risk under the
er threat
microscope www.ibanz.co.nz
CONTACTS: IBANZ CORPORATE COMPANY LIST IBANZ CORPORATE COMPANY LIST
Abbott Group
Christchurch
Insurance People (Fire & General) Limited
Auckland
Adams Trimmer Insurance 1992 Ltd
Whangarei
JRI Limited
New Plymouth
Advance Insurance Services Ltd
Paeroa
Luxor Insurance Brokers Ltd
Auckland
Advice First Limited
Wellington
Malcolm Flowers Insurances Ltd
Taupo
Affiliated Insurance Brokers Ltd
Wellington
Marsh Ltd
Auckland
AIB Group Insurance Ltd
Lower Hutt
Matt Jensen Insurance Brokers Ltd
Taupo
AIM Associates Ltd
Auckland
McDonald Everest Insurance Brokers Ltd
New Plymouth
Albany Insurance Services Ltd
Albany Village
Montage General Insurance Ltd
Auckland
Amicus Brokers Ltd
Christchurch
Multisure Ltd
Auckland
Andrew Scragg & Associates
Manukau
Nelson Marlborough Insurance Brokers Ltd (NIB)
Nelson
Aon New Zealand
Auckland
Neville Newcomb Insurance Brokers Ltd
Auckland
Apex General Ltd
Auckland
Northco Insurance Brokers Ltd
Masterton
Ascot Insurance Brokers Ltd
Whangarei
Northcrest Insurance Brokers Ltd
Auckland
Atlas Insurance Brokers Ltd
Christchurch
O'Connor Warren Insurance Brokers
Tauranga
Austinsure Ltd
North Shore City
OFS Insurance Brokers Ltd
Dunedin
Avon Insurance Brokers
Christchurch
Omni Fire & General Ltd
Auckland
Baileys Insurance Brokers Ltd
Auckland
Paramount Insurance Agencies Ltd
Auckland
Bay Insurance Brokers Ltd
Tauranga
Paterson & Co NZ Ltd
Auckland
Brave Day General Ltd
Auckland
Penberthy Insurance Ltd
Auckland
Bridges Insurance Services Limited
Hamilton
Peter C Cranshaw Insurance Broker Ltd
Levin
Broker Direct Services Ltd
Christchurch
PIC Insurance Brokers Ltd
Manukau
BrokerWeb Risk Services Limited
Auckland
Primesure Brokers Ltd
Auckland
Builtin New Zealand Ltd
Tauranga
Property and Commercial Insurance Brokers
Feilding
Cambridge Insurance Brokers Ltd
Cambridge
Protekt Insurance Brokers 2008 Ltd
Auckland
Capital Risk Solutions Limited
Wellington
Provincial Insurance Brokers Limited
Masterton
Card Marketing International Ltd
Wellington
PSC Connect NZ Limited
Auckland
Cartwright General Insurance Limited
Ashburton
River City Insurance Brokers 2000 Ltd
Wanganui
CBA Insurances Limited
Tauranga
RMA General Ltd
Warkworth
Certus Insurance Brokers NZ Ltd
Auckland
Rothbury Group Ltd
Auckland
Coast Insurance
Whangaparaoa
Runacres Insurance Ltd
Christchurch
Coastal Insurance Brokers Ltd
Papamoa
Seneca Insurance Brokers Ltd
Auckland
Commercial & Rural Insurance Brokers Ltd
Alexandra
Sit & Blake Limited
Auckland
Crombie Lockwood (NZ) Ltd
Auckland
South Pacific Insurance Brokers Ltd
Auckland
Dawson Ins. Brokers (Whakatane) Ltd
Whakatane
Sweeney Townsend & Associates Ltd
Rotorua
Dawson Insurance Brokers (Rotorua) Ltd
Rotorua
Thames Valley Insurance Ltd
Thames
Edward Ruys & Co Ltd
Hamilton
The Advisers 1 Limited
New Plymouth
Emerre & Hathaway Insurances Limited
Gisborne
Thorner General Insurances Ltd
Upper Hutt
Frank Risk Management
Cambridge
Towes Insurance Brokers Ltd
Te Aroha
FundAGroup Insurance Brokers Limited
Auckland
Trevor Strong Ins Ltd
Auckland
Glenn Stone Insurance Limited
Waitakere
Vercoe Insurance Brokers Ltd
Morrinsville
Grayson & Associates Ltd
Auckland
Vision Insurance (S.I.) Ltd
Ashburton
Gregan & Company Ltd
Papakura
Waikato Insurance Brokers Limited
Hamilton
GYB Insurance Brokers Ltd
Lower Hutt
Wallace McLean Ltd
Auckland
Harden & Hart Insurances Ltd
Auckland
Wanganui Insurance Brokers Ltd
Wanganui
Hazlett Insurance Brokers Ltd
Christchurch
Willis Towers Watson
Auckland
Honan Insurance Group (NZ) Ltd
Auckland
Yesberg Insurance Services Ltd
Christchurch
Hood Insurance Brokers NZ Ltd
Auckland
Hurford Parker Insurance Brokers Ltd
Hastings
Hutchison Rodway Ltd
Auckland
ICIB Limited
Auckland
ILG Insurance Brokers
North Shore City
Ingerson Insurances Ltd
Wellington
Insurance Advisernet NZ Ltd
Auckland
Insurance Brokers Alliance Ltd
Invercargill
www.covernote.co.nz
49
Legal problems are always unexpected. Great insurance outcomes shouldn’t be.
With a highly experienced team of liability insurance specialists working together under one roof, your customers can expect VL to find the best solution, should something unexpected arise. Get in touch on 09 306 0350 or visit our website.
veroliability.co.nz
New Zealand’s leading liability insurer