Quake holdouts anger Tower boss

"A number of these people are not in any form of hardship, and are basically engaging in actions to maximise returns." Tower chairman Michael Stiassny, right

Tower chairman Michael Stiassny has criticised some Canterbury earthquake victims for holding out on settlements to ‘‘maximise’’ their insurance claims.

Stiassny showed his frustration in reply to a question at Tower’s annual meeting yesterday.

Speaking after the meeting, Stiassny said there was an industry of lawyers and engineers ‘‘making it their business to take claims to court’’.

He said many people in Christchurch had been ‘‘through hell’’, but among the remaining claims yet to be settled were people seeking to ‘‘maximise’’ their returns from Tower.

‘‘A number of these people are not in any form of hardship, and are basically engaging in actions to maximise returns.

‘‘That’s what I’m entitled to be aggrieved about as chairman of an insurance company.’’

It was in Tower’s interests in some cases to settle to bring these cases to an end, but ‘‘it’s not our job to pay over the odds’’.

Tower’s job was to pay what was fair to policyholders, he said.

Some of the holdouts were living overseas, he said.

Tower’s financial performance continues to be dogged by the legacy of the Canterbury earthquakes. The NZX-listed company reported a loss in the year to the end of September 2016 of $21.5 million.

Chief executive Richard Harding said there had been a $25.3m impact from additional provisions for Canterbury, as the Earthquake Commission (EQC) discovered more ‘‘overcap’’ claims more than six years after the Canterbury earthquakes.

EQC pays the first $100,000 plus GST of earthquake claims on house insurance. If damage costs more than that to fix, the claim is ‘‘overcap’’ and homeowners’ private insurance kicks in.

‘‘The legacy from the Canterbury earthquakes remains a difficult and complex situation,’’ Harding said.

‘‘The ongoing claims development situation is being faced by all insurers. Unfortunately, as the only listed pure New Zealand general insurer, it is most visible with us. We are the canary in the coalmine.

‘‘Six years on, insurers still do not have clarity on the number and value of claims that remain.

‘‘Re-provisioning for Canterbury has become the norm for all as evidenced by Southern Response, MAS and IAG announcements in 2016. More recently, in the first quarter of 2017, Vero also increased their [earthquake] provisions.’’

Stiassny called the late appearance of overcap claims six years after the earthquakes ‘‘amazing and disappointing’’.

Harding also told shareholders that there had been ‘‘growth in the level of litigation and customer disputes’’.

Dealing with claims from the more recent Kaikoura earthquakes was much simpler as all policies were sum assured, where insurers have a maximum liability, and usually settle claims for cash payments.

Through the Insurance Council a memorandum of understanding had been signed between all insurers and EQC, meaning Tower should not be surprised by fresh claims.

‘‘These changes make it highly unlikely that we will see a repeat of the outcomes experienced in Christchurch that have resulted in six years of escalating costs,’’ Harding said.

‘‘We remain confident that the maximum claims cost [for the Kaikoura earthquakes] will be $7.2m after tax.

‘‘We expect the Port Hills fires to cost around $1.2m to $2m and the Auckland storms to cost around $3.5m to $4.5m.’’

There is uncertainty over Tower’s future as both Australian insurer Suncorp and Canada’s Fairfax Financial Holdings have made bids to buy it.