SEPTEMBER 2013
NZILA Annual Conference
By the time you read this, the NZILA Annual Conference should be well under way.
Due to the size of the conference facilities in Queenstown, only 225 people could attend this year. The conference sold out more than a month before it took place, with several potential registrants going on a waiting list. It is fantastic to have such a great response and a real credit to the organising committee. I hope Queenstown turns on some great weather, particularly for the Australian visitors.
There will be a summary of the NZILA conference in the special conference issue of Resolve that follows the AILA conference.
New Zealand remains a very interesting and challenging place to live and work. No sooner had the dust settled on the Canterbury earthquakes than Wellington and the top of the South Island were hit by a series of substantial earthquakes.
Due to the much larger earthquake deductibles imposed since the Canterbury earthquakes, the impact of the recent earthquakes on the insurance industry is much less than it would have been two or three years ago. That is good news from the industry’s point of view, but has raised interesting issues about what an insurer should do with an earthquake claim that seems to be well below the relevant deductible limit.
Commercial property deductibles are now often 5% and, in some cases 10%, of the site sum insured. A 5% site deductible on a building worth NZ$20 million is NZ$1 million, so insureds often retain a very substantial uninsured interest in their properties.
Insurers are caught between a rock and a hard place with claims that appear to be under deductible. Should an assessor be appointed at the insurer’s expense or should the insurer sit back and do nothing? It is either spend money unnecessarily on experts on a claim that ends up being under deductible or risk facing a claim where you only have the insured’s expert’s evidence available to assess the insured’s claim.
Insurers remember only too well the increases in reserves following the Canterbury earthquakes. Sometimes initial repairs were estimated at say NZ$20,000, then revised upwards to NZ$100,000 with the claim ultimately being settled for the sum insured of NZ$8 million. So what to do?
Case law from the Canterbury earthquakes is starting to proliferate. As I predicted when I spoke at Lloyd’s back in April 2012, NZ will become a common law testing ground for many material damage and business interruption issues that infrequently come before the courts.
UK academics are keeping a weather eye on NZ court decisions, with a summary of the NZ Court of Appeal decision in Ridgecrest being written up in an English online periodical within 48 hours of the judgement being released in NZ.
Some issues the NZ courts have ruled on over the past 12 months include:
A separate Earthquake List has been established in the High Court and a summary of all cases on it is available online.
On a different note, it is interesting to see the NSW Court of Appeal agreeing with the NZ Court of Appeal about defence costs under a D&O policy.