A High Court decision has clarified the limits on fees that insurance claims advocates can seek through New Zealand’s On-Sold Programme (OSP), a government-funded initiative for Canterbury earthquake claims.
The ruling affects fee-based claims services that support homeowners seeking financial settlements for unresolved earthquake damage.
The case involved Christchurch-based Proclaims Management, a firm specialising in claims preparation.
The company had sought to overturn an August 2023 District Court ruling that denied it a $51,083 “success fee” based on an OSP settlement.
Judge Tuohy, presiding over the initial case, ruled against the success fee, stating that a reasonable payment for Proclaims’ services would be “no more than $500.”
Following an appeal, the High Court upheld Tuohy’s original decision.
Dean Lester (pictured), a claims advocate based in Christchurch, said the ruling provides critical guidance for percentage-based fees charged by advocates assisting with homeowners’ insurance claims.
“In this case, there were two areas under consideration by the courts,” he said. “One was about fees payable with regards to the insurance claim made under the EQC (now NHC) Act, before it was put ‘over cap’ and into the OSP.”
The judgment distinguishes between the insurance response under the NHC Act, which provides support for “over-cap” claims exceeding EQC limits, and the OSP’s ex gratia payments for resolving claims beyond this cap.
“This finding by the judge provides clarity that Proclaims isn’t entitled to their success fee relating to OSP settlements, and any other homeowners in similar circumstances could be entitled to a refund if they have paid Proclaims or have entered into the same agreement with a similar company,” Lester said.
The OSP was created to provide “fair, timely, and enduring resolutions” and reduce legal costs for both the NHC and homeowners impacted by the earthquakes.
Lester emphasised that homeowners in the program should understand their choices: they can proceed with the OSP as designed or choose to involve a lawyer to help with their claims.
Focusing on the Canterbury earthquake, the Natural Hazards Commission (NHC) has faced criticism from Canterbury homeowners frustrated by delays in finalising earthquake claims.
Community advocates have argued that procedural hurdles and lengthy processing times have prevented some residents from addressing ongoing property issues.
NHC chief executive Tina Mitchell defended the commission’s operations, asserting that the NHC is committed to closing out remaining Canterbury claims and delivering fair outcomes to homeowners.
She said that the NHC continues to process and close around 340 re-opened claims each month. The commission also monitors procedural issues to help prevent delays and to address specific claim requirements promptly.
Out of the total 469,000 claims filed in the wake of the Canterbury earthquakes, 566 re-opened claims remained open as of mid-2024, down from 722 a year earlier. All of these are situations where a homeowner has re-opened a claim to seek further support.
Mitchell said that the NHC reviews each reopened claim to confirm that the damages reported are directly connected to the Canterbury earthquakes and that repair plans align with current assessment standards.
Alongside its traditional claims processes, the NHC manages the OSP, a separate initiative supporting homeowners who purchased properties with unresolved earthquake-related damage.
The commission reports that over 800 property owners have used the program to complete necessary repairs, enabling them to return to their homes.
To address remaining OSP claims, the government has recently set deadlines to expedite processing for the last 250 applications. The NHC has pledged to follow these revised timelines and help homeowners complete their claims within the updated guidelines.
