4 minute read
ICNZ calls for local leaders to prioritise climate change
by Benefitz
Ahead of October’s local government elections, the Insurance Council of New Zealand called on mayors, councillors and community board members to prioritise climate resilience, as environmental risks grow.
ICNZ chief executive Tim Grafton said climate events already cost communities millions of dollars each year, impacting health and wellbeing. He told local bodies to bolster their climate defences, with severe weather expected to become more frequent in the decades to come. "Investing in measures to reduce climate risks will have widespread benefits for communities and will help support the affordability of insurance the length and breadth of the motu," said Grafton. "Incoming councils must understand the risks facing their communities and put in place proportionate and timely measures to manage them."
It follows the publication of the NZSeaRise tool earlier this year, which highlighted the parts of New Zealand at greatest risk from climate change. For every home at direct risk as a consequence of rising sea levels, a further ten are at risk from floods following extreme rainfall, the ICNZ noted. "Our communities face multiple climate-related risks,” Grafton said. All incoming councils must act to address these if they are to maintain the viability of their communities over the medium to long terms. I hope that both electors and those they elect approach climate change as if the future of their communities depends upon it being taken seriously; because it does."
Pre-existing damage?
There is a difference between a sudden event and preexisting damage. Insurers will cover a sudden event that meets the policy’s terms and conditions, but they are not obliged to pay for damage that happened before the policy started.
In January 2020, Mr S made a claim for water damage to his house, which occurred when his washing machine overflowed after he was arrested. He said the police wouldn’t let him turn it off and, by the time he was released 2 days later, the house had flooded.
When the insurer’s loss adjuster visited the house 9 days after the flood, there was water damage to carpet, skirtings and wall linings throughout the house. It was noted that repairs would be difficult due to the condition of the house, its pre-existing damage and lack of maintenance. in March 2021 and provided a quote from a builder for $40,190.95 to repair the house.
Mr S’s builder told the insurer that the quote was based on the damage he could see. He said he could not provide a breakdown, because he could not say what damage was from the washing machine flood and what damage was not, because he had viewed the damage 14 months after the flood.
The insurer declined to pay Mr S $40,190.95. It said there was considerable pre-existing damage to the house and Mr S had told it there was unrepaired earthquake damage.
Mr S complained the insurer did not properly assess the damage, which “far exceeded the value [the insurer] allowed for”.
The IFSO Scheme found the settlement offer was fair and reasonable and the insurer was not required to make any further payments to Mr S.
In March 2020, Tawera* borrowed $16,000 to buy a new family car. Alongside the loan, Tawera purchased a health waiver that was intended to help him if he was unable to make his loan repayments due to sickness, hospitalisation, or terminal illness. If Tawera made a successful claim, up to $125 per week would be waived from his loan repayments.
In late 2021 and early 2022, Tawera was unable to work on four occasions due to sickness. In March 2022, he submitted health waiver claims to cover these periods. The lender accepted the claims. They confirmed they would waive three and a half weeks of loan repayments, totalling $437.50.
Tawera then contacted the lender and asked them to pay him the $437.50. The lender refused, so Tawera complained to FSCL. Dispute
Tawera thought the lender should pay the $437.50 directly to him. He said he was struggling financially after being off work, and really needed the money.
The lender explained that the health waiver did not operate like a normal insurance policy that would pay out money. Instead, the benefit of making a successful claim was that the lender would waive the payments that Tawera was otherwise required to make.
Although this was the normal position, Tawera had already made three of the four payments that were now being waived. This was because three of the periods of sickness Tawera was claiming for were in the past. This meant Tawera’s loan account was in credit by $255.50 after the waiver had been applied. The lender agreed to transfer this to him, but Tawera remained unhappy they would not release the full amount of his claim. Review
FSCL reviewed the health waiver terms and conditions. These confirmed that the benefit of making a successful claim was that loan payments would be waived. This meant FSCL could not say the lender should pay the full claim amount directly to Tawera. Overall, FSCL was satisfied the lender had correctly followed the waiver terms and had acted reasonably in transferring Tawera the credit balance. Resolution
FSCL recommended Tawera discontinue his complaint. He did not respond, so FSCL closed its file.
INSIGHTS FOR CONSUMERS
It is important for consumers to understand the difference between payment waivers and insurance policies. A successful claim on a waiver will not generally result in any money being paid to a consumer, rather the waiver covers the loan payments by paying them directly to the lender.
