State Insurance: earthquake FAQ – Part 3 Complaints and advocacy

The final part of the State Insurance FAQ deals with how complaints can be dealt with, and advocacy support. Again, while this post is focused on the State FAQ, the comments are generic and likely to apply to all insurance companies.


If you have a complaint about the way your claim (or you) are being handled by the insurer you can , once the standard process has been followed to the very (and likely bitter) end, raise it with what State call the Ombudsman.

This is not the “real” Parliamentary Ombudsmen, but the Insurance and Savings Ombudsman (ISO) established and funded by insurance companies. For more about the two, see the blog pages here and here.

At this point in the process you put your case, the ISO will assess it against the perspective of the insurance company, and the details of your insurance claim (which is a legal document and the basis of your insurance cover). Their recommendation will be made after consideration of all this. If you agree with it, fine, if not you can pursue the matter in the court’s system. The recommendation is binding on your insurance company.

The practical issues for us are:

  • the office of the ISO  is in Wellington, and they have said they will not be opening an office in Christchurch
  • at no stage do you get a chance to put your case in person as you would in a court or tribunal
  • the process does not allow you to have someone more experienced than you pursue the things that are in dispute, and to query the position of the insurance company

On the surface, this approach seems to be similar to trial by remote control without benefit of a lawyer.


The State FAQ simply mentions that there is no independent advocacy service. It then comments further on the role of the ISO.

It may have been an error on the part of whoever wrote the State FAQ, but the expression “independent advocacy service” makes no sense. Advocates cannot be independent, their job is to represent one side in its dispute with the other. Perhaps insurance companies are against the introduction of an advocacy service because it won’t be independent.

That fact that an advocacy service doesn’t exist is beneficial to insurance companies. Without an advocate most claimants are in a weak position. We may not:

  • clearly understand what our policy means
  • know if our insurance company has made a mistake
  • know what information to ask for
  • feel confident asking for the information we need
  • be able to put our questions/thoughts/position in writing
  • feel comfortable and confident in questioning the insurance company
  • have the interpersonal skills to be able to meet with the insurance company and disagree with them face to face
  • know whether the insurance company’s interpretation of our policy is correct, or if there are alternative interpretations that would be to our benefit

While no insurance company will accept the claim that they would disadvantage any client by the way they interpret or apply their policies, we live in an imperfect world and so do they. We are motivated by the need to have a home to live in, and to protect the asset it represents. They are motivated by cutting costs.

A final thought on why an advocacy service is essential. The way in which ACC has been treating injury claims has been likened to it “becoming like an insurance company”. We have seen how some people have been disadvantaged in their dealings with ACC. Do we want that to happen with our earthquake damage claims?

One Reply to “State Insurance: earthquake FAQ – Part 3 Complaints and advocacy”

  1. Hi Lawrence,
    Thanks for this post.
    A couple of thoughts would be that if an affected person wants to make a complaint to the insurer or to the ombudsman, they could involve a lawyer to make representations on their behalf (in other words the process can involve advice from a lawyer if you want to).
    Also, against an insurer should be possible to proceed directly to Court proceedings rather than going to the ombudsman. Whether that would produce a faster result, though, is debatable.
    On the issue of advocacy, the insurer's will likely each receive a significant number of these complaints, so they will quickly become familiar with the most relevant provisions in their insurance policy terms. Individual homeowners will usually each be dealing with these problems for the first time, so will not necessarily even know what the most relevant clauses in their insurance policies are.
    An advocacy service of some kind might be helpful in pooling homeowner knowledge so that homeowners have an understanding of the strengths and weaknesses of their insurance policies.
    Kris Morrison
    Parry Field Lawyers

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