Is the New Zealand insurance industry bracing itself for disaster litigation?
Is the New Zealand insurance industry bracing itself for disaster litigation? | Insurance Business New Zealand
Claims
Is the New Zealand insurance industry bracing itself for disaster litigation?
Law firm partner says there’s “anticipation” following the floods
Claims
By
Terry Gangcuangco
This year’s weather events in New Zealand, particularly Cyclone Gabrielle, have reminded many of the Christchurch earthquake from more than a decade ago, with the latter often being cited as a comparable disaster in terms of the enormity of the aftermath. Now a commercial litigation and dispute resolution partner is suggesting the comparison might well apply in the area of litigation.
In a video produced by Global Insurance Law Connect – a network of law firms with insurance expertise spanning 23 countries – Duncan Cotterill partner Rob Coltman (pictured above in a screengrab from the video) said there is “anticipation of litigation” following the floods in early 2023.
“Claims arising from weather incidents are clearly a significant practical issue,” said Coltman, who was talking about the key insurance trends in the country. “New Zealand has something of a recent experience of disaster litigation because of the Canterbury earthquakes back in 2010, 2011.
“And, really, there was a decade of insurance litigation, which to a significant extent expanded the understanding of general liability, material damage, business interruption, wordings. Those sorts of issues come to the fore with the weather events. We’ve had flooding claims, but also after the flooding [there were] slips and other land movement claims [as well].”
According to Coltman, whose camp acts for a number of major insurers in New Zealand, important discussions are being made with the law firm’s clients in this regard.
“Crisis response has been part of what we’re talking about to our clients but also, in anticipation of litigation that will follow standing up ourselves, the capability to handle the claims advice and litigation necessary,” he said. “So, [that’s] pretty much to the fore at the moment in New Zealand.”
In February, the Natural Hazards Insurance (NHI) Bill passed its third and final reading in Parliament. The new piece of legislation clarifies law relating to repairing buildings and land following a landslip or other land damage. Among other things, it also simplifies the excesses and calculations for retaining walls, bridges, and culverts.
At the time, Minister Responsible for the Earthquake Commission (Toka Tū Ake EQC) Dr Deborah Russell said: “This government is improving the Earthquake Commission scheme so in future New Zealanders don’t have to go through the same traumatic experiences as the people of Canterbury.
“This is also relevant in the wake of the recent floods in Auckland and widespread damage caused by Cyclone Gabrielle.”
The NHI Act, however, isn’t commencing until July next year and won’t affect any claims made prior to then. In the meantime, the Insurance & Financial Services Ombudsman (IFSO) scheme is witnessing an uptick in the number of enquiries, mostly surrounding insurance delays.
“What we’re seeing is it’s not only the complaints enquiries about the flooding and Cyclone Gabrielle and all the associated claims; it’s about the business-as-usual claims that have been slowed down because of the urgency and the prioritisation of the other claims,” IFSO Karen Stevens told Insurance Business in a recent interview.
“People are ringing us to find out how they can get attention for their particular claims… It’s going to take months and months, and possibly a year to a year and a half to maybe two years to get all this sorted. The business-as-usual stuff is not going to take that long, of course, but it will take a bit longer for a claim to be processed than usual.”
It remains to be seen how much of an impact the current claims situation will have on the world of insurance litigation, but, as indicated by Coltman, the prospect is something that insurers are on the lookout for.
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