The Insurance Council of New Zealand is unlikely to support plans to raise the cap on compensation that dispute resolution schemes can award in property insurance cases.

CEO Tim Grafton says the council is consulting with members before it submits a formal response to the Government’s discussion paper on the matter, but he has doubts about the move.

“On the surface the proposal sounds well intentioned, but I’m not sure it’s been well thought through,” he told insuranceNEWS.com.au. “I expect increasing the cap would have a negligible impact on reducing the High Court’s [case load].”

The Government proposes increasing the cap from $NZ200,000 ($192,000) to $NZ350,000 ($337,000).

It believes this will make the schemes a more effective mechanism for resolving insurance disputes and provide relief to the High Court, which is struggling with a backlog of more than 200 cases arising from the 2010 and 2011 earthquakes.

Financial services providers, including insurers, are required to belong to an approved dispute resolution scheme.

Most general insurers belong to the Insurance and Savings Ombudsman, with some belonging to Financial Services Complaints Ltd. Both make rulings on disputes below $NZ200,000.

In proposing a $NZ350,000 threshold, the Government says the schemes “are a less formal, cheaper and faster alternative to courts. Complaints are free for clients and scheme decisions are only binding if accepted by the client. The financial service provider cannot appeal the scheme’s decision.”

Mr Grafton notes – as does the discussion paper – that while the schemes are bound by limits of $NZ200,000, members can waive the limit.

“The opportunity [to have a case considered by a dispute resolution scheme] is already available to people who have a case before the High Court,” he said. “Our members, on a case-by-case basis, may lift the cap, and have done so, but this has had a negligible effect on High Court numbers.”

A report last September by Chief High Court Judge Helen Winkelmann on the Christchurch earthquake list – set up in 2012 to manage litigation arising from the quakes – reveals the extent of the problem.

Since 2012, when “filings began in earnest”, the number of claims filed with the High Court averaged 11 a month. Of the 359 cases filed since September 2010, 238 remained active four years later.

Submissions in response to the discussion document close on April 9. Any regulatory changes arising from the process are expected to be in place by the middle of the year.