IN NOVEMBER 2013, IT SAID THAT 93% OF PEOPLE WERE TAKING THE DEFAULT SUM OFFERED BY THEIR INSURER. IT ESTIMATED THE CONSEQUENT RATE OF UNDERINSURANCE COULD BE A MINIMUM $167 BILLION OF A TOTAL HOUSING VALUE OF MORE THAN $717 BILLION. level of risk was still too high. Founder and chief executive Andy Thomson said banks and insurers had acknowledged the problem. He said the major companies he dealt with had made it clear they would increase the base rates on which their default sums were calculated. But Thomson said CCC’s experience was that even when homeowners were warned their cover was too low, they did not increase the sum insured for their property, not trusting the data supplied. Thomson said jargon such as “rebuild estimate”, “gross floor area” and “construction inflation” could also be causing confusion. He said CCC was developing relationships with banks and insurers to help improve sum insured accuracy. The firm was also lobbying for regulation in the quantity surveying sector.
He said there was no regulation to prevent insufficiently skilled, dishonest operators producing rebuild reports that were incomplete and contain inaccurate figures for insurance. Thomson says that as financial services providers changed their calculations to reduce the risk of underinsurance, the “cowboy” operators were the next big risk the industry needed to manage, and a degree of regulation should be introduced comparable to legislation of financial services companies and advisers after the finance company sector collapse. Consumer NZ backed him up. It said there was nothing to stop someone setting up shop as a provider of insurance valuations, and many people had. “As things stand, there’s nothing to stop anyone who wants to set up shop as a provider of insurance valuations. No qualifications needed and no questions asked.”