The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) has reiterated the importance of accuracy in insurance claims after a recent case involving a declined flood claim due to misleading information. The reminder comes as New Zealand faces a rise in storm-related insurance activity.
Following the Auckland floods in January 2023, a policyholder – referred to as Heather (name has been changed) – submitted a claim for 43 household items she reported as damaged and discarded. However, the insurer’s inquiry determined that some of the listed items were actually kept in a storage facility nearby. Upon further questioning, Heather amended her claim, reducing the number of items to 10.
The insurer found that the initial statements were inconsistent with the facts and, under the terms of the policy, denied the claim and cancelled the policy.
Heather appealed the decision through the IFSO Scheme, explaining that family members had been responsible for moving and disposing of the belongings and that she had not personally checked the storage unit. The IFSO Scheme, however, concluded that it was “deliberately reckless” to claim compensation for items without confirming their status. The complaint was dismissed.
Karen Stevens, Insurance & Financial Services Ombudsman, commented on the pressures policyholders face during frequent flood events. “Providing false information can result in your whole claim being declined, not just the items that were inaccurately included. And if you’re found to have committed fraud, then you’ll likely not be able to get insurance in future,” Stevens said.
Stevens added that individuals uncertain about claim details should verify information before submitting. “It’s important to remember that insurance relies on trust. Honesty is always the best policy – especially when so many are relying on insurance to recover from natural disasters,” she said.
This recent case serves as a reminder for insurance professionals to reinforce the importance of accurate disclosure with clients, particularly as natural disaster claims become more common.
This recent case comes at a time when New Zealand’s insurance sector is experiencing a significant surge in claims. Insurance companies have reported a sharp increase in claims activity after a series of damaging storms in October. The adverse weather, which particularly affected rural areas in the South Island, has led to more than 3,300 claims with major insurers, including AMI, State, and NZI – all part of IAG’s New Zealand operations. FMG, a mutual insurer with a strong rural focus, has received over 2,600 claims, with early loss estimates exceeding $20 million.
Insurers and brokers are continuing to process claims and support policyholders with recovery. Stephannie Ferris, executive general manager for claims at AMI, State, and NZI, stressed the importance of safety. “Please remember, we’re here to pay claims; it’s what we do. While photos are always helpful, they should only be taken when it is safe to do so,” Ferris said.
Policyholders are advised to contact their insurer as soon as possible, especially if their property cannot be occupied or if alternative accommodation is needed. AMI and State customers can lodge claims online or by phone, while NZI clients are directed to contact their broker. For land damage, insurers will coordinate with the Natural Hazards Commission (NHC) as part of the claims process.
Willis Towers Watson (WTW) has advised clients to ensure everyone’s safety before beginning any property assessment or repairs. The company recommends immediate contact with brokers or Willis Claims after an incident, and, if needed, engaging qualified trades to prevent further loss and secure the site. Urgent repairs are generally covered by policies, provided that the work and damage are properly documented with photos and receipts.
WTW also suggests appointing a single representative to handle communications with insurers, loss adjusters, and contractors. Policyholders should establish a dedicated cost code for the event, collect all relevant documentation, and keep their broker informed with regular updates. Early estimates of total loss can help insurers allocate resources and support more effectively.
