Welcome to our May newsletter. As the weather begins to cool down perhaps an update on recent developments in the area of insurance for an intriguing read on those longer nights. So, further to the legislative changes I wrote to you back in July & December 2014, developments follow.
As your insurance brokers, one of our frequent duties is to understand & update you all on the frequent change being imposed which effects many people today. Our focus is on delivering greater value to our customers by providing cover which best protects you our clients, financial well-being. Part of this focus is continually assessing products and what is provided particularly when legislative changes occur such as the Sentencing Amendment Act 2014.
An update perhaps first. Before the Sentencing Amendment Act 2014 came into force in December 2014, if someone was at fault for an accident, the courts could only order the person to pay for the property damage & emotional harm caused. Where the victim was injured physically in an accident, they could only be compensated under the Accident Compensation Act 2001.
In some instances however, ACC payments could leave victims out of pocket due to the limited amounts payable by ACC.
The Sentencing Amendment Act allows the courts to order the person at fault to compensate victims of bodily injury for their financial losses over & above what ACC pays by way of reparation. This does not replace ACC but provides a ‘top up’ where ordered by a court. The court can only make an order of reparation when the person at fault has been convicted of a crime & is being sentenced.
Whilst we are yet to see any significant examples of this new legislation in play we are aware there are cases before the courts. Accordingly whilst some insurers are not yet pricing for this increased exposure & take a wait to see approach to how awards from the courts develop; however we are all conscious, as awards are made it is inevitable prices across all the relevant covers will need to increase as will the need.
Recently one insurer conducted research into the awareness of people on the legislation & concerns they may have around the changes. The research showed few people (13%) were aware of the new Act, but most people then support its introduction. This presents an opportunity again therefore for us both to have a conversation with you, our clients about the implications of the Act & our combined response.
To ensure clients are best protected, some insurers have updated the home, contents, & motor plus liability sections of their commercial, personal & rural policies. These parts updated typically relate specifically to damages & reparation.
This covers liability for a person to pay compensation in a civil claim. While commercial policies always covered liability to pay compensation in a civil claim for both accidental property damage claims & accidental emotional harm claims, personal insurance policies typically only covered only the former. Cover has now been introduced for liability to pay compensation for accidental emotional harm into personal insurance policies. As before, there is cover for legal defence costs & any costs incurred by the plaintiff (claimant) for those responsible who are ordered to pay.
This covers liability to pay a reparation order made at a sentencing hearing to a victim who has suffered accidental property damage or accidental bodily injury. It applies only in criminal proceedings.
Previously, most of our insurance policies excluded cover for liability to pay reparation. Many personal insurance policies excluded cover for accidental bodily injury. As a result, no policies covered liability to pay reparation for accidental bodily injury.
To address the changes brought about by the Sentencing Amendment Act 2014, some policies have extended liability cover for reparation resulting in accidental bodily injury. An opportunity has also been taken to also provide cover for liability to pay reparation for accidental property damage in those of the policies which previously did not have this cover.
Defence costs are not covered in reparation cases. Also, the liability of clients must be because of a criminal act which is careless & not knowing, reckless or intentional, which acts remained excluded from cover. Also, there is no reparation cover for health & safety prosecutions, cover for which can be purchased under a Statutory Liability policy.
Policy exclusions continue to operate (such as being under the influence of intoxicating liquor or drugs) & there are some conditions your clients will need to meet for this cover to apply so I thought it was important we update you here ahead of discussing them as required.
The Sentencing Amendment Act is complex but we are confident our response will ensure our clients are best protected. Given you have an agreed wording through us, we will be in touch directly to discuss the necessary changes. We are also putting together a detailed Q&A document which may help with any questions you have about the law change & policy response. Please advise if you would like one before your renewal.
We appreciate these changes will require conversations with our clients so please contact myself or Carla if you have questions or require additional information before I make contact with your annual renewals.
Finally, I wish to advise I am taking an opportunity for 10 days off before winter sets in & going back to Waimatuku, my home town in Western Southland for some whitebait & duck delicacies. Whilst away, Carla will be here, but I will also be available on my mobile & with Blue Tooth in the car look forward to chatting with anyone who wishes or needs to call. We look forward to speaking with you again soon.
With my best wishes, keep warm.