An Auckland lawyer is weighing into Christchurch's insurance woes, warning group action could set a precedent for how insurance companies handle major natural disasters in the future.
An earthquake-damaged home in the Christchurch suburb of Sumner Photo: RNZ / Diego Opatowski
Commercial trial lawyer Kalev Crossland will meet residents this week to consider legal action that tests the "good faith" principle between insurers and policy holders.
Mr Crossland said policy holders paid their premiums in the belief their claim would be settled in a reasonable amount of time, with as little stress as possible.
However, he had heard what he called "surprising" stories from some Christchurch residents that suggested many insurers were not acting in that way.
"Once I got tuned in it bore relation to some of the insurance company tactics that were apparent in the United States post Hurricane Katrina and the industry there has had a big shake-up and it appears that's needed in New Zealand," he said.
Bruce Sheppard, a director of the country's only litigation funding company LPF group, will join Mr Crossland on his visit to consider whether testing the good faith principle has merit.
Mr Crossland said if funding was secured, insurers would take the threat of litigation seriously, which tended to result in a "much fairer outcome".
Christchurch City Councillor Ali Jones has campaigned on insurance matters since the earthquakes and said the potential legal action was not just for people who were still stuck in insurance stalemates.
It was also for those who felt forced to take a cash settlement or had repairs they were not happy with, she said.
She said having a financial backer meant the case would not have to rely on the depth of the homeowners' pockets.
The Insurance Council declined to comment and Canterbury Earthquake Recovery Minister Gerry Brownlee was unable to be contacted.
Mr Crossland and Mr Sheppard will speak to residents at the Transitional Cathedral on Friday night.