New Zealand: Insurance risks drive robust legal activity

Almost half a decade after the first powerful quake shook the Canterbury region in 2010, we might expect earthquake-related legal insurance work to be tailing off. While the opposite is true – 3,000 reclassified cases is just one of many catalysts for new work – there are a number of other maritime and regulatory risks driving insurance activity in the legal industry.

It's been almost five years since Canterbury was charged with a 7.1 magnitude earthquake, the first of many powerful quakes to hit the region from September 2010.

The following February, 185 people lost their lives as a deadly 6.3 magnitude quake struck closer to Christchurch. It changed the city and its residents forever, and several years on, many of them are still dealing with the aftershocks as they attempt to rebuild their lives.

From a legal perspective, one might have anticipated that the Canterbury earthquake would be a diminishing source of work for lawyers in this area. But that's not the case, says Andrew Horne, partner at Minter Ellison Rudd Watts; in fact, the opposite is occurring.

"You might have expected that as increasing numbers of claims were resolved, the dispute would die down, but we're seeing the opposite occur," he explains.

"There's an increasing number of intractable cases that insurers haven't been able to settle, which is perhaps owing to a greater willingness by private individuals to take matters further; these are people who have been waiting patiently, but realise that they can't resolve matters any other way."

There's another big driver of Canterbury activity that has emerged in recent months, says Richard Johnstone, partner as Wynn Williams.

"There is actually a bubble of new claims that have come about, as the Earthquake Commission (EQC) has resolved to push these claims over cap," Johnstone says.

"These are claims that have been sitting within EQC's responsibility for some years, but in the course of this year, the Commission has identified them as being over-cap – so there's a dump of nearly 3,000 claims that were, until now, virtually unknown to insurers. That's a significant change, and for homeowners who have been dealing with EQC for many years, they now have to almost start again with their insurer."

Other key changes over 2015
Reclassification of cases isn't the only major change impacting the industry.
Johnstone reports that a number of house repair programs have come (or are coming) to a close, which is adding complexity to already complicated cases.

"EQC closed their repair program earlier in the year, and a couple of the other large insurers have also done so, officially or unofficially," he explains.

"They're trying to encourage homeowners to cash out rather than repair, and that's raising significant issues about the scope of works, coverage under the policy, and finding building contractors to actually do the work. Ultimately, a homeowner who is not a repeat client will pay a different figure to an insurer who brings them a lot of business. The last few months has seen a lot of new disputes."

Elsewhere in the insurance legal landscape, lawyers are guiding their clients through significant changes to three major Acts.

"The key regulatory changes over the last year in insurance law are the amendment of the Fair Trading Act 1986, to prohibit unfair contract terms, and the amendment of the Sentencing Act 2002 to allow reparation sentences to top-up ACC payments," explains Crossley Gates, Insurance Partner, DLA Piper New Zealand.

"The amendment of the Fair Trading Act 1986 led to most insurers reviewing their policy wordings and making some changes. The industry is generally taking a 'wait and see' approach to the amendment to the Sentencing Act 2002."

There's also the Financial Markets Conduct Act (FMCA), which came into force in two stages, in April and December 2014.

"This means that brokers now fall under the jurisdiction of the Financial Market Authority (FMA) rather than the Commerce Commission, and the FMA are likely to be much tougher regulator," says Andrew Horne.

"We're seeing increasing activity in that area already. Brokers need to be aware that they're in a new era, and they need to understand their duties under the Act and make sure they perform them."

Insurance law on the high seas
It's not just earthquake-related claims and regulatory change driving legal insurance activity in 2015.

With its relatively isolated geographical position, to the east of Australia and far east of Asia, New Zealand is exposed to some unique and noteworthy maritime insurance risks.

There are, of course, the usual risks associated with marine industries –namely, that a ship could sink or leak. Such was the case when the Rena ran aground on the Astrolabe Reef, off the port of Tauranga, in 2011.

It was described by then-Environment Minister Nick Smith as "New Zealand's most significant maritime environmental disaster", as the fuel on board consisted of 1,700 tonnes of heavy oil and 200 tonnes of diesel fuel. The New Zealand government estimates that the clean-up bill was in the vicinity of $130m, but marine insurance law expert Matthew Flynn, partner at McElroys, says the financial and safety ramifications of that event have continued to impact the shipping and marine industries in the years since then.

"There is an increase in concerns over navigational safety around the New Zealand coastline, following incidences such as the Rena, which has become the second-most expensive salvage of any vessel in the world," Flynn says.

"There also continues to be a high degree of interest internationally in the salvage of vessels, safe navigation and the regulatory prescriptions for limitation of liability, given the high value of a large number of maritime claims."

At McElroys, Flynn says they are "regularly working on a number of matters where cargos involved in international trade are damaged or delayed in transit from New Zealand".

"A number of issues [have arisen], caused by political and labour unrest at various New Zealand export destinations, all of which have a flow-on impact to the arrival of goods in time and in good condition, and there are challenges arising due to the vagrancies of the weather conditions encountered at sea, as well as differing methods of carriage of our primary products out of New Zealand," Flynn explains.

"As New Zealand is so distant from any markets, there can also be issues to do with sourcing the right type of ships, and for many ship owners it is a long way to bring a vessel to New Zealand with no cargo.

New Zealand has 10 export ports, which is a large number for a country of this size. The industry faces continuing issues over the logistic requirements to get its export goods from the place of production to its final markets, and our works revolves around some of those issues."

A "marked increased" in the amount of new construction work has been a recent development, with buyers coming to New Zealand to purchase vessels and construct new ones. "This seems to bode well for New Zealand's marine manufacturing industry," Flynn says.

Predictions for the year ahead: In 2015 and beyond

An increasing appetite to litigate
"Historically, New Zealand has gone from being one of the lighter regulatory environments, to now one that is becoming increasingly regulated, with a much more active regulator. With increasing activity from the New Zealand Exchange and other regulators, we're seeing a surge in the amount of work in directors and officers liability insurance. We're also seeing more insurance claims where people are brought in for questioning and proceedings are issued against them, with an uptick in professional negligence, and increasing instructions from insurers and the insured with an appetite to litigate." – Andrew Horne, Partner, Minter Ellison Rudd Watts.

Ongoing challenges for all participants
"Changes to the Health and Safety in Work legislation is expected to have a significant impact on the local marine industries, with relatively risky operations such as fishing and heavy equipment handling required to make changes to meet the more stringent requirements. Another interesting trend going forward is that ships are slowing down, resulting in large fuel savings and less environmental impact, but slower transit times. These trends are being managed by both the shipping companies and the New Zealand exporters, and represent an ongoing challenge for all participants," – Matthew Flynn, Partner, McElroys

Core changes on the horizon for some years
"The Canterbury earthquakes created a huge demand for legal work. The issues they raised were unprecedented on a global scale, because of the succession of separate events and the level of underinsurance. That work is still driving activity, although it is mostly the difficult claims that are left. Meanwhile, regulation is on the increase and core changes to insurance law have been on the horizon for some years now. The UK Parliament has recently passed a new Insurance Contracts Act and we expect New Zealand will follow suit in the near future. This will be a step-change for the insurance industry in New Zealand." – Crossley Gates, Insurance Partner, DLA Piper New Zealand.

Building disputes in Canterbury: 10 years to resolve
"We're involved in both the insurance side and the wider construction aspect in Christchurch, with building disputes related to unsatisfactory repairs and inadequate new construction jobs. I think we're going to see more building disputes coming out of Canterbury; it will literally be another 10 years' [worth of work].

We're also seeing more desperate homeowners, if only because the claims are getting harder. Legally, the work is still complex, still challenging and it's personally rewarding. The diverse work coming out of our Auckland practice – including general liability instructions, and life and health insurance work – gives us something to think about other than earthquakes." – Richard Johnstone, Partner, Wynn Williams

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions