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Ruling backs NZ insurers’ ‘fundamental ability’

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The Insurance Council of New Zealand (ICNZ) says a ruling by the country’s highest court of appeal over an earthquake damage dispute has affirmed long-held legal principles.

The Supreme Court found buyers of a property were not entitled to restore the home and claim the replacement sum under a policy agreed with IAG by the previous owners – despite believing the rights had been assigned to them.

ICNZ CEO Tim Grafton says the new owners did not seek the insurer’s consent to the assignment, while at the time of the sale no repairs had been carried out under the policy.

“The ability of insurers to choose whether to take on assignments is fundamental in their ability to adequately manage the risks they choose to hold,” he said.

“Insurers’ ability to look after their customers and help them recover from adverse events is dependent on management of their existing portfolio and ongoing reinsurance support.

“If the Supreme Court had chosen to negate this long-held principle, it could have had far-reaching and very damaging consequences for the insurance market in New Zealand.”

The property was damaged in the Canterbury quakes in 2010 and 2011, and the owners made a claim against IAG NZ. But after three years it remained unresolved and they decided to sell.

Mr Grafton says the decision has reaffirmed New Zealand insurance contract law, which has been in place for decades, plus principles going back to the 1860s in England.

“If [this case] had gone the other way, that could have potentially led to people reopening claims,” he told “It would have set a new precedent.”

IAG NZ was contacted by, but declined to comment.

More details on the case – Ruiren Xu and Diamantina Trust Ltd v IAG New Zealand Ltd – can be found here.