27 March 2015

Community interaction –

learning from complex claims

Inherent complexities

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» Open-ended insurance cover – all negotiable

» Extreme environmental factors:

» Ongoing seismicity

» Large tracts of poor land

» Other damage that is not damage to building under the

insurance policy – increased flooding risk, risk of rock fall etc.

» Legacy environmental issues: contamination, heritage

» Continued flow of claims from EQC – customer distress

» Unique two-tiered cover: EQC and private insurer

» Customer base and their issues increasingly complex over time –

strategies to respond need to evolve

Introduction

» Unprecedented scale in terms of insurance response with over

50,000 claims across five categories:

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Claim type Number

Over cap on 7,348 properties 12,171

Out of EQC scope 23,796

Contents 2,911

Temporary accommodation 15,695

Loss of rent 2,180

TOTAL 56,753

» 7,348 overcap and 21,583 out of scope claims notified as at 28

February 2015

» 22,773 or 78.7% of those claims now fully settled (57% of overcap)

Overcap Claims notifications – what’s been happening

4

» New claims continued to be notified strongly in 2014

4

through 2013

end of 2014

New claim numbers grew steadily from the start of 2011 and

flattened out at the end of 2012 before climbing again in 2014.

Community interactions

» Community forums

» Coordinated support with various community groups, i.e. CanCERN and CETAS

» Targeted rebuild and repair workshops – to give customers “comfort”

» MPs and their staff

» Protest movement

Objective is to both learn and share

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Response to complexities

» “Qualitative easing” – still being fully embedded into operations

consideration also given to additional information presented by customers from reputable

independent experts

independent review of disputed claims - dedicated team with access to independent experts in

engineering, geotechnical and quantity surveying to assist with resolution

assisting customers to obtain their own independent advice from reputable sources.

» Encouragement of Residential Advisory Service (RAS) and CanCERN’s Breakthrough

initiative

» Internal Solutions team – complex one-off issues

» Customer Support team – targeted assistance for vulnerable customers, including “wrap

around” care via MSD-funded initiative

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Vulnerable customers – whole portfolio

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11/08/2014 8/09/2014 13/10/2014 11/11/2014 4/12/2014 15/01/2015 10/02/2015 10/03/2015

Maintenance 12 14 18 20 25 31 31 40

Construction 43 51 65 71 77 90 92 99

Contract 29 38 45 41 42 32 30 22

Documentation 100 106 115 123 122 129 135 158

Predesign 137 142 129 132 144 142 147 140

No Decision made 73 70 74 65 71 68 67 69

OOS 26 26 34 37 31 40 41 50

Temp. Accom 2 1 1 3 1 1 1 2

0

100

200

300

400

500

600

700

Cla

ims

Vulnerability Progress as at 10/3/15

Vulnerable customers – whole portfolio

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11/08/2014 8/09/2014 13/10/2014 11/11/2014 4/12/2014 15/01/2015 10/02/2015 10/03/2015

Maintenance 12 14 18 20 25 31 31 40

Construction 43 51 65 71 77 90 92 99

Contract 29 38 45 41 42 32 30 22

Documentation 100 106 115 123 122 129 135 158

Predesign 137 142 129 132 144 142 147 140

No Decision made 73 70 74 65 71 68 67 69

OOS 26 26 34 37 31 40 41 50

Temp. Accom 2 1 1 3 1 1 1 2

0

100

200

300

400

500

600

700

Cla

ims

Vulnerability Progress as at 10/3/15

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Vulnerable customers –

end-to-end management

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11/08/2014 8/09/2014 13/10/2014 11/11/2014 4/12/2014 15/01/2015 10/02/2015 10/03/2015

Maintenance 1 2 3 3 5 5 4 6

Construction 3 4 8 10 11 16 16 18

Contract 3 5 10 9 11 8 9 7

Documentation 15 26 28 30 30 39 44 52

Predesign 6 30 30 35 41 45 46 49

Decision 15 22 25 21 24 20 22 22

0

20

40

60

80

100

120

140

160

180

Cla

ims

Customer Support Team - progress excl OOS as at 10/3/15

10

Vulnerable customers –

end-to-end management

10

11/08/2014 8/09/2014 13/10/2014 11/11/2014 4/12/2014 15/01/2015 10/02/2015 10/03/2015

Maintenance 1 2 3 3 5 5 4 6

Construction 3 4 8 10 11 16 16 18

Contract 3 5 10 9 11 8 9 7

Documentation 15 26 28 30 30 39 44 52

Predesign 6 30 30 35 41 45 46 49

Decision 15 22 25 21 24 20 22 22

0

20

40

60

80

100

120

140

160

180

Cla

ims

Customer Support Team - progress excl OOS as at 10/3/15

Partnership among insurers addressing shared property

issues

» Examining the prospect of co-locating with another insurer

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CCC District Plan review

Under-insured / no

insurance

Owner decision-making

Title issues

Other insurer position

Complex regulations

EQC Declaratory judgment

Cash settling vs.

Building

Shared Property buildings

Other examples of industry cooperation

» District Plan Review

» Joint efforts to improve customer experience in the recovery

» Retaining walls, land surveying – united response in an attempt to overcome

barriers to progress

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Future significant challenges to be fully addressed

» Repairs portfolio

Disputed methodology – inadequate communications

Customer’s preference for a rebuild where existing house can be

repaired to the policy standard

» Multi unit progress

Customer agreements and courses of action

» Court capacity issues - spurious Court actions delaying progress

One lawyer has 86% of all outstanding High Court cases

66% of those are undercap – all recent notifications – since May 2013

Southern Response working with EQC to address this phenomenon

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Court capacity issues – spurious actions

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Defendant

Number

of cases

filed

Insurer’s

total of

residential

EQ List (%)

Plaintiff

representation

by one lawyer

Insurers'

% by that

insurer

Overcap

% of

insurer's

total

Undercap

% of

insurer's

total

Cases open

Southern

Response96 33% 78 81% 48% 52% 79

IAG 77 27% 57 74% 38% 62% 58

Tower 50 17% 36 72% 72% 28% 24

Vero 23 8% 17 74% 52% 48% 15

Lumley 28 10% 25 89% 43% 57% 24

AA 17 6% 17 100% 53% 47% 13

Allianz 1 0.3% 0 0% 0% 100% 0

MAS 2 0.7% 1 50% 100% 0% 2

Total 288 225 78% 51% 49% 210

unresolved 180 Only 30 cases open

from other than one lawyer% of all open 86%

Supporting alternative methods of dispute resolution

» “Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out

to them how the nominal winner is often a real loser – in fees, expenses, and waste of time.”

- Abraham Lincoln, Notes For a Law Lecture, July 1, 1850 – still true today

» We support

ISO facilitation (voluntary removal of $200k cap on ISO’s jurisdiction)

RAS facilitated Multi Party Meetings

Court mediation

Reputable advocate involvement

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