IAG/State Insurance Just Keeps On Demonstrating Why It Won The Roger Award

Christchurch_cbd

This latest outrage by IAG/State Insurance just goes to show why it was such a worthy winner of the 2015 Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand.

http://www.stuff.co.nz/business/79908651/iag-ordered-to-pay-christchurch-couple-over-700000

As we said, when we announced the winner last week, IAG/State Insurance was a finalist for the fourth consecutive year, which will be no surprise to anyone who has lived in Christchurch since 2010. This time the nomination was for two major reasons. To quote the nominator: “Economic dominance (specifically insurance market dominance). I draw your attention to the detail hidden in this Press article (19/2/15) which reveals that IAG discloses ‘a significant portion’ of its Canterbury quake costs in ‘the lower tax jurisdiction of Singapore’ and thus paid ‘an unusually low tax rate of 10% in the first half of 2015’. Note that also that IAG’s Chief Executive Officer (CEO) was the highest paid CEO in NZ in the 2014/15 financial year, on $4.59m. There’s money to be made from other people’s misery.

“And impact on people. Five years after the Christchurch earthquakes started the insurance transnationals (of which IAG/State is by far the biggest) are still making life hell for thousands of Christchurch people. IAG/State is far from alone in this but it is the biggest and some of its practices are the worst. In 2015, State has pressurised its ‘too hard cases’ in Christchurch to accept a cash settlement and become responsible for their own repairs or rebuilds. This means State wants to walk away from its contractual obligations to those customers. There are still State customers living in caravans and garages. Things have got so bad IAG is among the insurance companies and Government bodies which are the subject of a claim to the Organisation for Economic Cooperation and Development (OECD) for breaches of its Guidelines for Multinational Enterprises. As has been said before in previous Roger Awards, what has happened, and is continuing to happen in Christchurch, sets a very bad precedent for what the rest of the country can expect from IAG/State and the other insurance TNCs in the event of a major disaster”.

The Judges’ Statement, by Chief Judge Sue Bradford says: “For three of us (five judges), IAG was a clear winner”.

“Dennis Maga (judge): This is a consistent finalist and far worse compared to others. IAG should be exposed and condemned publicly because of their economic dominance, low tax rate, high paid CEO and the pain they have caused to Christchurch earthquake victims”.

Deborah Russell (judge; summarised): “IAG has behaved in a callous fashion with respect to people in Christchurch by refusing to pay out insurance & engaging in shoddy repairs. People who feel insecure, who do not have a place of refuge, and who have no place to call home, can’t function well in our society. This state of insecurity has a particular impact on women who are usually the people responsible for making a home and ensuring children have a safe place to be. Children are badly affected when living in insecure environments. IAG also deserves the Award because they have simply refused to play by the rules of the business game. Whatever else may be said of the other five finalists, they have at least played within the rules (perhaps only MediaWorks could also be described as not playing by the rules). The rules of insurance are very clear. The insurer takes the risk, assesses it and charges a price. IAG took peoples’ money but it has not taken the risk. Instead it has tried to shift the risk back to its customers”.

Sue Bradford: “From the perspective of someone outside Christchurch it seems incredible that IAG has had such a free run. The degree of suffering for which they have been responsible from just after the earthquakes up to the present day seems phenomenal and abhorrent. Adults and children have suffered in all sorts of ways, with life options closed off, mental and physical illness, broken relationships, financial hardship and more. Alongside other institutions, including Governmental, IAG have been part of presenting an impenetrable wall that people can’t get through to resolve their housing and insurance issues. In terms of degree of harm inflicted, even just looking over the past year which is the subject of this Award, the level of damage caused is high compared to that perpetrated by the other nominated companies. There is an ecological aspect also, in terms of the impact of IAG’s approach on the built environment in Christchurch”.

“Delay, Deny, Defend”

The separate writers of the Judges’ Report concluded: “In one respect the homeowners of Christchurch were fortunate: their insurance policies provided for full replacement of damaged properties. As happened in Australia following the (2011) Queensland floods, the New Zealand insurance industry has now switched to insuring homes for fixed amounts, offloading onto policyholders the responsibility for understanding the cost of replacement following a future disaster when resources are stretched and fly-by-night builders take the money and vanish, leaving dodgy work to be patched up.

“For IAG and other private insurance companies in the uncompetitive and inadequately regulated New Zealand market, the lessons from the Canterbury earthquakes are straightforward: offer less and charge more, while meantime blaming the Government for the effects on the citizens of Christchurch of five years of ‘delay, deny, defend’. The New Zealand government has given unwarranted credibility to the industry’s PR line by its own inept and often obstructive response to the disaster, by its failure to step up to its regulatory responsibilities, and by failing to step clear of the strategic alliances and networked relationships that make Government complicit in the insurance industry’s betrayal of legitimate customer expectations. But, as the dominant player in this sorry tale, IAG/State Insurance is a richly deserving winner of the 2015 Roger Award”.

The full Judges’ Report, including a financial analysis of IAG/State Insurance, is online at http://canterbury.cyberplace.co.nz/community/CAFCA/pdf/roger-award-2015-judges-report.pdf

Murray Horton

Secretary/Organiser

(03) 3663988/ 0274 307742

CAFCA

Campaign Against Foreign Control of Aotearoa

Box 2258, Christchurch 8140, New Zealand

cafca@chch.planet.org.nz

www.cafca.org.nz

Facebook: http://tinyurl.com/cafcafb

Watchblog: http://tinyurl.com/watchblog

twitter:@NZN4S

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