Insurance & Savings Ombudsman: Watch out for mis-information

Watch out for mis-information

Christchurch residents have, as is natural, been seeking support from each other since the earthquakes. Sometimes the information being exchanged about their insurance claims isn’t always correct.

“We are concerned that Cantabrians may not be aware of all avenues available to them,” says Insurance & Savings Ombudsman (ISO) Karen Stevens. “We have been following online discussions by Cantabrians and have noticed that some consumers either have not heard of the ISO Scheme’s free dispute resolution service or don’t know how to use it.

“We have also noticed a number of common misconceptions about the service that we would like to clear up. These misconceptions may be holding people back from making complaints,” says Stevens.

Common misconceptions:

Misconception: If your house is worth more than $200,000 the ISO Scheme can’t consider the complaint. The ISO Scheme can consider complaints where the total claim is $200,000 or less. It can consider complaints over the $200,000 threshold if the insurer agrees. If the insurer has accepted the claim, the ISO Scheme can also consider a complaint where the amount in dispute is up to $200,000. For example, the ISO had a complaint made where an insurer had offered a settlement of $223,858 (including EQC payment and excesses) as the repair cost for a red-zoned property. Following an in-depth investigation by the case manager, the insurer agreed to change the methodology and offer a settlement of $397,115, (which was accepted).

Misconception: The Insurance Council handles claims about insurance companies. The Insurance Council is the insurers’ industry body. Anyone who is unhappy with the handling of an insurance claim should first make a complaint to their insurer and go through the internal disputes process. If that fails and they reach “deadlock”, they can then contact the ISO Scheme.

Misconception: Insurance companies don’t have to abide by ISO Scheme’s decisions. Insurance companies are bound by the ISO Scheme’s decisions. Where the case is settled, the insurer and consumer usually sign a binding agreement, which means that both parties agree to the outcome.

Misconception: Consumers cannot take a case to court once it has been heard by the ISO Scheme. ISO Scheme decisions are not binding on consumers. If a consumer is unhappy with a decision of the ISO Scheme, he/she can still take the matter to court. However, the reverse is not true. Consumers are not able to make a complaint to the ISO Scheme where it has already been considered by a Court or the Disputes Tribunal.

Misconception: The ISO Scheme handles complaints about EQC. The Parliamentary Ombudsman handles EQC complaints. Complaints to the Ombudsman can be made online here: http://www.ombudsman.parliament.nz/make-a-complaint/make-a-complaint-now

Misconception: You can’t make a complaint until your insurance company gives you a notice of “deadlock”. If a written complaint has been made and a notice of “deadlock” has not been received within 2 months, the ISO Scheme can consider the complaint.

Misconception: The ISO Scheme is run by insurance companies for insurance companies. The ISO Scheme provides an independent and impartial service to resolve insurance disputes. It is funded by its members including many insurance companies, but is not part of the industry. It is not a government body.

Misconception: The ISO Scheme can ignore the policy and rule on what is fair. The ISO Scheme can only make a decision based on what the consumer is entitled to under the policy wording, but must make a fair and reasonable decision in all the circumstances having regard to the law.

Misconception: The ISO Scheme doesn’t handle business claims. The ISO Scheme can consider complaints made by small businesses. The definition of “small business” is a business with less than 19 full-time employees. Providing the claim falls within the ISO Scheme’s Terms of Reference, the complaint can be considered at no cost to the business.

Misconception: The ISO Scheme can make insurance companies pay compensation. The ISO Scheme has no power to penalise the insurer, or require it to pay any compensation on a goodwill basis – except for “special inconvenience” up to $3,000 in specific circumstances. It can’t consider underwriting decisions, premiums, charges and excesses.

Misconception: The ISO Scheme can only consider insurance complaints. The ISO Scheme expanded its dispute resolution service in 2010 as a result of new financial sector legislation. It now has more than 3,000 participating financial service providers, offering a wide range of financial services to consumers. Complaints can be made to the ISO Scheme about any of its Participants.

The ISO Scheme is a complaint resolution service which is independent, impartial and free to consumers.
www.iombudsman.org.nz

ENDS

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