Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor explains why insurance disputes have risen to record levels

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Jenee Tibshraeny: NZ Herald Wellington business editor explains why insurance disputes have risen to record levels · Best of Business

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  Speaker 2: As I was telling you earlier, insurance disputes have risen
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  Speaker 2: to record levels. The Herald's Wellington business editor, Janae Tibshirani,
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  Speaker 2: has been looking into this for us and is with us. Hi, Janae.
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  Speaker 3: Hi, Heather.
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  Speaker 2: What's going on here?
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  Speaker 3: Well, a few different factors. The Insurance and Financial Services
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  Speaker 3: Ombudsman received nearly twice as many health insurance-related claims over
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  Speaker 3: the past year. So it received 170, or not claims, sorry, disputes.
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  Speaker 3: It dealt with 170 disputes, almost twice as much as
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  Speaker 3: the previous year. A couple of reasons. Firstly, people are
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  Speaker 3: not understanding the scope of what's covered by insurance and
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  Speaker 3: But secondly, insurers are sort of changing the way they
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  Speaker 3: deal with some claims. So in some of the insurance contracts,
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  Speaker 3: it says, you know, the insurer will pay for your surgery,
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  Speaker 3: provided the cost is reasonable. But what we're seeing now
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  Speaker 3: is that some of these costs are no longer deemed
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  Speaker 3: reasonable by the insurers. So, you know, the health system's
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  Speaker 3: under pressure. Apparently, surgeons in particular, some of them are
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  Speaker 3: charging an arm and a leg. And the insurers are saying, look,
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  Speaker 3: the cost of the surgery is too high. You need
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  Speaker 3: to pay some money towards the cost of your surgery.
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  Speaker 3: We're not covering the whole claim. So apparently, according to
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  Speaker 3: the ombudsman, that is a bit of an issue. You know,
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  Speaker 3: the health system is under pressure. The costs are rising.
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  Speaker 3: And you know that this is proving to be a
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  Speaker 3: headache for some people with insurance.
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  Speaker 2: That's interesting because, I mean, reasonable is reasonable. is completely subjective,
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  Speaker 2: isn't it? So what's the advice? If you've got reasonable
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  Speaker 2: in your policy, what should you do about it?
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  Speaker 3: Yeah, look, that's the thing. Apparently in the past, insurers
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  Speaker 3: were a little bit more forgiving. They'd always settle claims,
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  Speaker 3: and now they're taking sort of a harder line. To
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  Speaker 3: be fair, I don't know what the advice is. I
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  Speaker 3: don't know what you can do about this. Presumably, the
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  Speaker 3: more you pay for insurance, the better quality of the
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  Speaker 3: policy is that you might get. But I think that
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  Speaker 3: this is pretty galling for people because the price of
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  Speaker 3: insurance has really shot up. For the past two years,
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  Speaker 3: the inflation in health insurance premiums has been in the
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  Speaker 3: double digits. Over the past year, it's gone up by 19%.
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  Speaker 3: You know, at that price, I guess, as a consumer,
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  Speaker 3: you're expecting your claims to be settled. But I think,
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  Speaker 3: you know, the insurance sector always says it's important to
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  Speaker 3: read the T's and C's, don't just look at the price,
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  Speaker 3: read the fine print. But, you know, I can sort
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  Speaker 3: of see why this is problematic. Something else that the
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  Speaker 3: ombudsman said was, you know, as... people kind of deal
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  Speaker 3: with the cost of living crisis. Everyone's just a bit grumpy,
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  Speaker 3: you know, and complaints are soaring. And you see it
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  Speaker 3: the same thing with the banking ombudsman as well. You know,
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  Speaker 3: there's a bit of discontent. People are doing it tough,
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  Speaker 3: so they're complaining more. And also another factor is AI.
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  Speaker 3: You know, if you talk to chat GPT, it can
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  Speaker 3: help you put together a complaint and you can fire
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  Speaker 3: that through. And they reckon that that might also be
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  Speaker 3: behind the sort of spike in complaints.
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  Speaker 2: I see. OK, that makes sense. Now, look, on the U-turn,
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  Speaker 2: I see that you've done a little bit of work
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  Speaker 2: today on the tax deductibility U-turn by the Labour Party.
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  Speaker 2: I think good call from them. I think it is
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  Speaker 2: going to absolutely do what they wanted to do, which
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  Speaker 2: is it's not going to push up rents to the
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  Speaker 2: extent that it would have. But my question for you
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  Speaker 2: is why didn't they announce this sooner? Because they must have,
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  Speaker 2: if we believe them, if we take them at their
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  Speaker 2: word that this is about the interaction with the capital
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  Speaker 2: gains tax and they don't want to double tax, then
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  Speaker 2: surely they already knew that ages ago.
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  Speaker 3: Yeah, look, I'm so confused by that because when Labour
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  Speaker 3: announced its capital gains tax, the question I asked was,
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  Speaker 3: what would you do with interest deductibility? Because it would
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  Speaker 3: be pretty heavy handed if you don't let property investors
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  Speaker 3: deduct interest as an expense every year. That means they
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  Speaker 3: have a big tax bill every year. And then also,
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  Speaker 3: it'd be heavy-handed if you then don't allow them to
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  Speaker 3: deduct the interest when they come to pay the capital
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  Speaker 3: gains tax. So that would be unfair, that would be
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  Speaker 3: an overkill. But at the same time, it would be
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  Speaker 3: kind of weird if you couldn't deduct the interest every year,
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  Speaker 3: but then you could deduct it when you came to sell.
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  Speaker 3: And that's how it's worked previously under the Bright Line test,
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  Speaker 3: and it's just a bit messy. So the thing is,
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  Speaker 3: is that this issue has been known, and anyone who
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  Speaker 3: has sold a property under the previous Labour government will
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  Speaker 3: understand this because they would have dealt with this issue.
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  Speaker 3: So it's not sort of a niche issue or special issue.
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  Speaker 3: They knew about this issue. They said they were working
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  Speaker 3: through it. And now they say, oh, they finally worked
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  Speaker 3: through it. So to be fair, I'm completely confused. I
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  Speaker 3: do wonder whether they wanted to keep hammering National for
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  Speaker 3: dishing out tax cuts to landlords. That's their catchphrase. I
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  Speaker 3: wonder whether they wanted to keep using that phrase for
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  Speaker 3: another year. It's either that. Or it's that they don't
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  Speaker 3: understand how these things work.
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  Speaker 2: Either is plausible, isn't it? Either is plausible.
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  Speaker 3: And I guess, yeah, thanks Heather.
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  Speaker 2: Yeah, I really appreciate it. Junaid Tibshiradi. You could just
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  Speaker 2: hear Junaid's frustration, eh? Like so many other people with
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  Speaker 2: the Labour Party. Harold's Wellington business editor, obviously.
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