link to page 2 link to page 2 link to page 6 link to page 6 link to page 15 link to page 15 link to page 18 link to page 18 link to page 20 link to page 20 link to page 22 link to page 22 link to page 24 link to page 32 link to page 32 link to page 35
OIA 20210422
Information for release
1.
Treasury Report T2020-1070 Southern Response_ Facilitating the Treasury's
1
Progression of Potential Options
2.
Treasury Report T2020-3145 Southern Response Court of Appeal decision on
5
Dodds case
3.
Aide Memoire T2020-3504 Southern Response Update following Supreme Court
14
decision
4.
Aide Memoire T2020-3525 Southern Response_ Flow Chart to Support Recent and
17
Forthcoming Advice
5.
Aide Memoire T2020-3624 Southern Response Cost of Proactive Settlement
19
Package
6.
Aide Memoire T2021-410 Southern Response High Court decision re package
21
communications
7.
Treasury Report T2021-954 Update on Southern Response
23
8.
Extract Treasury Report T2020-1199 Southern Response_ Draft Accountability
31
Documents for FY 2021_22
9.
Aide Memoire T2021-1686 Southern Response package query
34
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Treasury Report: Southern Response: Facilitating the Treasury’s
Progression of Potential Options
Date:
20 April 2020
Report No:
T2020/1070
File Number:
CM-1-3-112-2-1
Action sought
Action sought
Deadline
Minister Responsible for the
Agree to have a discussion with the Chair 4 May 2020
Earthquake Commission
of EQC
(Hon Grant Robertson)
Minister for Greater Christchurch Note the contents of this report
4 May 2020
Regeneration
(Hon Dr Megan Woods)
Contact for telephone discussion (if required)
Name
Position
Telephone
1st
Contact
Lisa Wood
Senior Analyst, Commercial
N/A
s9(2)(k)
Performance
(mob)
Shel ey Hollingsworth Manager, Commercial
s 9(2)(g)(ii)
Performance
(mob)
Minister’s Office actions
Return the signed report to the Treasury.
Note any
feedback on
the quality of
the report
Enclosure:
No
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Treasury Report: Southern Response: Facilitating the Treasury’s
Progression of Potential Options
Purpose
1.
This report seeks your agreement to have a discussion with the Chair of the
Earthquake Commission (EQC) ahead of the Treasury’s engagement with
management. The Treasury would like to assess the entity’s suitability and willingness
to undertake the role of implementation agent for any potential proactive package for
Southern Response Earthquake Services Limited’s (Southern Response’s) customers.
Background
2.
Earlier this year, you and the Minister for Greater Christchurch Regeneration, as
shareholding Ministers of Southern Response, asked the Treasury to begin exploring
implementation agent options ahead of the Government considering any potential
proactive package for Southern Response customers who are in the same position as
Mr and Mrs Dodds.
3.
The Treasury has identified three Crown entities and a hybrid arrangement as potential
options for the role of implementation agent which we would now like to explore in
more detail. The options are:
a
EQC;
b
the Ministry of Business, Innovation and Employment (MBIE);
c
the Treasury; and
d
a hybrid, specific purpose arrangement, in conjunction with, an insurance loss
adjustor.
4.
We are at the stage where we would like to engage with EQC to carry out an
assessment of its suitability for, and willingness to undertake, the role. However, before
we do so, it would be beneficial if you could engage with the Chair, Sir Michael Cullen.
The EQC board has previously indicated that it would prefer not to be involved in
matters related to Southern Response’s litigation.
Suggested Talking Points
5.
Below we summarise the main points that we consider useful to include in your
discussion with the EQC Chair.
a
The Crown took over the Dodds case to gain greater clarity: As the Chair wil
know, the Crown took over control of the proceedings in the Dodds case. The
appeal against the High Court decision is intended to gain greater clarity from the
Court of Appeal on a number of matters which are also likely to have implications
for many other Southern Response customers whose claims were previously
considered settled on a ful and final basis. As you have publicly stated, it is
intended that following an appellate court decision, the Crown wil engage with
Southern Response to find a proactive solution for others in the same situation as
the Dodds.
b
Ministers prefer an organisation independent of Southern Response as the
implementation agent: While the contractual obligation to policyholders is
Southern Response’s, there is merit in the party implementing any proactive
package being independent of Southern Response.
T2020/1070: Southern Response: Facilitating the Treasury’s Progression of Potential Options
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c
A Crown entity is desired: Given the potential sums of public money involved
and the reasons behind any proactive package, it is also preferable that any
implementation agent be within the Crown or owned by the Crown.
d
There is already a close working relationship between the two entities:
While it is clear that EQC is navigating a number of significant challenges, the
Treasury needs to evaluate each option on its merits. Two of the key benefits of
EQC as the implementation agent, are its familiarity with residential insurance
claims settlement processes and the close working relationship with Southern
Response. This is particularly important since administration of any package will
require substantial input from Southern Response. Therefore, any review of
options which did not include EQC would be incomplete.
e
Whoever the implementation agent is, they will be provided with support to
fulfil the requirements of the role: Whichever option is finally determined to be
most appropriate, there is unlikely to be a heavy demand on the implementation
agent’s resources for the fol owing reasons:
i
Southern Response is working on ensuring its customer records are in an
accessible form;
i
the principles for any package will be determined by the Government in
consultation with the Board of Southern Response;
i i
experienced labour resources wil need to be contracted as no entity has
sufficient suitable surplus capacity; and
iv
it is anticipated that the agent will be paid for its services, and supported by
Southern Response.
f
The implementation agent will not take on liability in respect of the
underlying customer claims. The liability in relation to paying customers,
remains a contractual one between Southern Response and its customers.
Therefore, it is anticipated that the arrangement between Southern Response
and the implementation agent would be limited to claims processing.
T2020/1070: Southern Response: Facilitating the Treasury’s Progression of Potential Options
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Recommended Action
We recommend that you:
a
agree to discuss the implementation agent role with the EQC Chair
Agree/disagree.
Minister Responsible for the Earthquake Commission
b
note the contents of this report
Noted.
Minister for Greater Christchurch Regeneration
Shelley Hol ingsworth
Manager, Commercial Performance
Hon Grant Robertson
Minister Responsible for the Earthquake Commission
Hon Dr Megan Woods
Minister for Greater Christchurch Regeneration
T2020/1070: Southern Response: Facilitating the Treasury’s Progression of Potential Options
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Treasury Report: Southern Response: Court of Appeal’s
Dodds decision
Date:
17 September 2020
Report No:
T2020/3145
File Number:
CM-1-3-112-2 (Projects)
Action sought
Action sought
Deadline
Minister Responsible for the s9(2)(h)
24 September 2020
Earthquake Commission
(Hon Grant Robertson)
Agree to the attached interim messages for public
communications about the
Dodds outcome
Agree to forward a copy of this report to the
Attorney-General for his information
Minister for Greater
s9(2)(h)
24 September 2020
Christchurch Regeneration
(Hon Dr Megan Woods)
Agree to the attached interim messages for public
communications about the
Dodds outcome
Contact for telephone discussion (if required)
Name
Position
Telephone
1st Contact
David Stanley
Principal Advisor, Commercial
s9(2)(k)
s 9(2)(g)(ii)
Performance
Shel ey Hol ingsworth Manager, Commercial Performance
Actions for Ministers’ offices
Return the signed report to the Treasury
Note any
feedback on
the quality of
the report
Enclosures:
Yes (attached)
Appendix 1:s9(2)(h)
Appendix 2:
Appendix 2:
Appendix 4: Recommended public communication messages
Appendix 5: Potential questions that media may ask
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Treasury Report: Southern Response: Court of Appeal’s
Dodds decision
Purpose
1.
s9(2)(h)
Court of Appeal decision
2.
s9(2)(h)
3.
4.
s9(2)(h)
5. s9(2)(h)
6.
T2020/3145 Southern Response: Court of Appeal decision on
Dodds case
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7.
s9(2)(h)
8.
9.
s9(2)(h)
10. s9(2)(h)
11.
12.
1
T2020/3145 Southern Response: Court of Appeal decision on
Dodds case
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13. s9(2)(h)
14.
15.
16.
17.
Public communications
18. s9(2)(h)
Southern Response will issue a similar media
statement at the same time. We also provide further messages as wel as answers to
questions that the media may ask (Appendix 5).
Next steps
19. We are currently undertaking work on the design of a proactive package. If you decide
not to appeal the Court’s decision, we wil provide further advice on the design of the
package within the next three weeks. Following the election we wil provide advice on
the implementation of a package, including options for an Independent Oversight
Committee. We expect to consider wider implementation and cost implications for
Southern Response in both pieces of advice. At this stage we estimate that up to 3,000
Southern Response policyholders could be affected at a total cost likely to be $200-$300
million. The actual cost will depend on elements included or excluded from any package.
T2020/3145 Southern Response: Court of Appeal decision on
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Recommended action
We recommend that you:
a
s9(2)(h)
Agree/disagree.
Agree/disagree.
Minister Responsible for the
Minister for Greater Christchurch
Earthquake Commission
Regeneration
b
agree to the interim messages for public communication about the
Dodds case
(Appendix 4)
Agree/disagree.
Agree/disagree.
Minister Responsible for the
Minister for Greater Christchurch
Earthquake Commission
Regeneration
c
agree to forward a copy of this report to the Attorney-General for his information.
Agree/disagree.
Minister Responsible for the
Earthquake Commission
Shelley Hol ingsworth
Manager, Commercial Performance
Hon Grant Robertson
Hon Dr Megan Woods
Minister Responsible for the
Minister for Greater Christchurch
Earthquake Commission
Regeneration
Appendix 1, 2 and 3 withheld in full under s9(2)(h)
T2020/3145 Southern Response: Court of Appeal decision on
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Appendix 4: Recommended public communications
Media statement for issue by Ministers
The Crown has today announced that it will not appeal the Court of Appeal decision in the
K. & A. Dodds v Southern Response Earthquake Services Ltd case.
Southern Response has said that it accepts the findings of the Court of Appeal, and the
Minister Responsible for the Earthquake Commission, Hon Grant Robertson, says that he
is pleased for Mr and Mrs Dodds that this process is now concluded for them. Southern
Response will be paying the damages awarded by the Court to Mr and Mrs Dodds shortly,
and arrangements have already been made to cover their legal costs.
“We acknowledge that this has been a difficult process for Mr and Mrs Dodds, and I have
again extended a sincere apology to them for the fact that they have had to go through
this appeal process.
“As we explained when the decision was made to appeal the High Court decision, this
appeal was never about just Mr and Mrs Dodds’ individual case, but about needing
greater clarity from the courts on how to fairly apply the findings to other policyholders in a
similar situation.
“This Government wants to find a fair and enduring resolution for the outstanding
Canterbury earthquake claims, and that means being able to use the findings of the Court
of Appeal to help inform and proactively respond to other policyholders who are in a
similar situation to Mr and Mrs Dodds.
“Now that the Court of Appeal has provided us with greater clarity on this issue, the
Government has asked Southern Response to prepare options for how it could best
respond to other affected policyholders using the principles of this Court decision.”
Media statement for issue by Southern Response
Southern Response accepts the findings of the Court of Appeal in the case of K. & A.
Dodds v Southern Response Earthquake Services Ltd and the Crown’s decision not to
appeal that judgement.
Southern Response wil be paying the damages awarded to Mr and Mrs Dodds by the
Court shortly, and arrangements have already been made to cover their legal costs.
Southern Response’s General Manager, Casey Hurren, said: “We accept the Court of
Appeal’s findings and, while we regret that Mr and Mrs Dodds have been in the middle of
this, we are pleased that this court decision has provided us with some of the principles on
which we will be able to base our response to other affected policyholders. We are now
working closely with the Government to formulate that response in more detail.”
Further comment
If media are wanting further comment at this phase, responding now to questions around
misconduct by Southern Response will mean that, by the time the payment package is
announced, those issues will have been addressed and will not detract as much from the
positive news of the payment package.
Comments will need to be restricted to what has been decided at this point and not venture
into details of the payment package that are not yet confirmed. For example:
T2020/3145 Southern Response: Court of Appeal decision on
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•
We accept the Court’s findings and wil pay Mr and Mrs Dodds in accordance with the
findings of the Court.
•
We have apologised again to Mr and Mrs Dodds as this has no doubt been a difficult
process for them, and we have of course covered their legal costs. By going through
this, Mr and Mrs Dodds have helped to ensure that we will now be able to respond to
other policyholders in a similar situation without them needing to also go through the
courts.
•
The Government and Southern Response are working closely together to formulate the
response to other potential y affected policyholders.
•
We are not in a position to provide any more detail about that until the work is complete,
other than to say that the intention is to use the principles in this court decision to inform
a fair and enduring resolution for other affected policyholders.
Customer communications
Any customers querying how this decision affects them will need to be told the fol owing.
The Government and Southern Response are currently working through what the
response to affected policyholders will be and who those policyholders are. We will be
able to provide more information once those decisions are finalised.
At the broadest level, policyholders that may potential y benefit are those who settled an
over-cap claim with Southern Response between 4 September 2010 and 1 October 2014.
More information wil be publicly released as soon as decisions around this response have
been made.
T2020/3145 Southern Response: Court of Appeal decision on
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Appendix 5: Potential questions that media may ask
Court of Appeal outcome
• Why aren’t you appealing against the Court of Appeal’s decision?
The purpose of the appeal was to gain greater clarity on aspects of the High Court
decision so that the Crown could work with Southern Response to find a proactive
solution for other affected policyholders. The Court of Appeal decision does provide the
greater clarity that we sought and, therefore, we are now working to determine an
appropriate solution.
• Does Southern Response now accept that it misled customers?
Southern Response has accepted the Court’s findings that the representations it made at
the time have been found to be incorrect. Southern Response has also accepted that,
although its opinions were genuinely held, for the purposes of the Fair Trading Act, the
Court has found this to be misleading and deceptive conduct.
• How is this outcome any different to the High Court decision? Was the Court of Appeal
process a waste of time?
The Court of Appeal largely upheld the High Court decision but there were important
elements or aspects of the decision that are different. For example, the Court of Appeal
provides clearer reasoning that it did not matter that Southern Response communicated
what it genuinely believed the Dodds were entitled to under their policy at that time
because it was incorrect about these views. This was because the appeals courts
decided differently after the Dodds originally settled with the company.
• What are the specific differences between the High Court decision and the Court of
Appeal decision?
Once we are in a position to advise affected policyholders on any proactive solution we
will be able to elaborate on how the Court of Appeal decision has informed us, but until
then it would be inappropriate for me to comment further.
• What happens next?
Now that the Court of Appeal decision has been released, I have asked officials to move
forward to provide advice on proactive solution options. I am expecting this advice within
the next few weeks.
• What has this process cost Southern Response and the Government?
We will provide you with that information in due course
• How does this outcome affect the
Ross case?
The Ross case is currently before the courts and, therefore, it is inappropriate for me to
speculate on anything to do with that case.
T2020/3145 Southern Response: Court of Appeal decision on
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• Are Mr and Mrs Dodds included in the
Ross class action? Does this disqualify them? Is
there any risk they would need to give a percentage of their payment to GCA (law firm)?
That is a matter for their own legal representatives to advise the Dodds, and it would be
inappropriate for me to comment on such matters.
T2020/3145 Southern Response: Court of Appeal decision on
Dodds case
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Reference:
T2020/3504 CM-1-3-112-1
Date:
18 November 2020
To:
Minister of Finance (Hon Grant Robertson) Minister Responsible for the
Earthquake Commission (Hon Dr David Clark)
Deadline:
None
(if any)
Southern Response: Update following Supreme Court decision
in Southern Response Earthquake Services Ltd v Ross
released on 17 November 2020 [Legally privileged]
s9(2)(h)
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s9(2)(h)
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s9(2)(h)
Re advice to you: We are currently preparing a paper for you regarding a proactive
solution for Southern Response policyholders who cash-settled with the company
before 1 October 2014, and that paper wil include more information about the Ross
representative action. Our expected timing for this report is Wednesday 25 November
2020. There will be a draft Cabinet paper attached which we would like you to consider
and amend as appropriate. If you approve, the Cabinet paper should enable
presentation of the proposed proactive solution – and the risks associated with that
solution – to your col eagues at either the 7 December or 14 December 2020 Cabinet
meeting. Southern Response is expected to consider (and likely approve in-principle) a
proactive package on 23 November 2020.
s9(2)(h)
David Stanley, Principal Advisor, Commercial Performance, s9(2)(k)
Shelley Hol ingsworth, Manager, Commercial Performance, s9(2)(k)
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Reference:
T2020/3525 CM-1-3-112-2-1
Date:
19 November 2020
To:
Minister of Finance (Hon Grant Robertson)
Minister Responsible for the Earthquake Commission (Hon Dr David Clark)
Deadline:
None
(if any)
Southern Response: Flow Chart to Support Recent and
Forthcoming Advice [Legally Privileged]
Following the update provided to you on 18 November 2020 regarding the Supreme
Court decision in
Southern Response Earthquake Services Ltd vs Ross [T2020/3504
refers], s9(2)(h)
A flow chart diagram has been provided on the fol owing page in order to support
Ministers in considering recent and forthcoming advice in relation to Southern
Response Earthquake Services.
Lisa Wood, Senior Analyst, Commercial Performance, s9(2)(k)
Shelley Hol ingsworth, Manager, Commercial Performance, s9(2)(k)
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s9(2)(h)
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Reference:
T2020/3624 CM-1-3-112-2-1
Date:
30 November 2020
To:
Minister of Finance (Hon Grant Robertson)
Associate Minister of Finance (Hon Dr Megan Woods)
Associate Minister of Finance (Hon David Parker)
Minister Responsible for the Earthquake Commission (Hon Dr David Clark)
Deadline:
N/A
Southern Response: Cost of Proactive Settlement Package
Introduction
This aide memoire provides indicative estimates for the cost of the proposed settlement
package that is being considered for Southern Response policyholders fol owing recent
court decisions. It fol ows our report T2020/3029
Southern Response: Proposed
parameters for a proactive settlement package dated 25 November 2020. The Minister
Responsible for the Earthquake Commission requested an estimate of the costs ahead
his meeting with Crown officials at 5:30pm on Tuesday 1 December 2020.
This information along with details on Crown funding options and the Independent
Oversight Committee for the proposed package wil be contained in a Treasury report
we expect to send to you this week.
Estimated cost
Up to now, the level of liability that Southern Response has in respect of policyholders
in the same position as Mr and Mrs Dodds (or even all those who cash settled before
1 October 2014) has been unquantifiable. This is reflected and referred to in both
Southern Response’s and the Treasury’s financial statements for the year ended
30 June 2020.
Southern Response has sought advice from its independent actuary, Finity. Following
our discussions with Southern Response, we have prepared Table 1 with estimates of
the potential cost of the settlement package. The estimates are based on the extent to
which the package is offered to groups of policyholders and are cumulative, eg the
estimate for category 2 is the total estimated liability for al claims falling under category
1 and then extended to policyholders under category 2.
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The extent of actual costs that arise from any proactive settlement could vary
significantly from these indicative estimates depending on factors including:
•
the findings upon review of each policyholder’s specific files given the range of
different circumstances and the different form of recording matters in the files in
the early years fol owing the earthquakes (ie before a more standardised process
was implemented), and
•
the number of policyholders who apply and are found to qualify for any package
being implemented. The figures in Table 1 are based on estimates of the number
of qualifying policyholders and a 100% participation of those policyholders in any
package.
Table 1: Estimated potential cumulative cost of settlement package (GST incl)
Category s9(2)(h)
$114 million
1
Category
$299 million
2
Category
$326 million
3
David Stanley, Principal Advisor, Commercial Performance, s9(2)(k)
Shelley Hol ingsworth, Manager, Commercial Performance, s9(2)(k)
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LEGALLY PRIVILEGED
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Reference:
T2021/410
CM-1-3-112-2
Date:
25 February 2021
To:
Minister of Finance (Hon Grant Robertson)
Associate Minister of Finance (Hon Dr Megan Woods)
Associate Minister of Finance (Hon David Parker)
Minister Responsible for the Earthquake Commission (Hon Dr David Clark)
Deadline:
None
(if any)
Southern Response: High Court decision re package
communications
The Court decision
s9(2)(h)
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LEGALLY PRIVILEGED
Media coverage
There is likely to be media coverage of this decision, and s9(2)(h)
s9(2)(g)(i)
While the package is a Government initiative, it is Southern Response that is the
defendant in the Ross class action. We therefore recommend that any queries directed
to Ministers are referred to Southern Response for answer.
Next steps
s9(2)(h)
David Stanley, Principal Advisor, Commercial Performance, s9(2)(k)
Shelley Hol ingsworth, Manager, Commercial Performance, s9(2)(k)
Philippa Le Couteur, Senior Solicitor, s9(2)(k)
Vincent Schumacher, Senior Solicitor, s9(2)(k)
Treasury:4421885v1
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Treasury Report: Update on Southern Response [Legally Privileged]
Date:
5 May 2021
Report No:
T2021/954
File Number:
CM-1-3-112-2-1
Action sought
Action sought
Deadline
Minister of Finance
Note the content of this report
None
(Hon Grant Robertson)
Minister Responsible for the
Note the content of this report
None
Earthquake Commission
Agree that a copy of this report
(Hon Dr David Clark)
should be forwarded to the Attorney-
General.
Contact for telephone discussion (if required)
Name
Position
Telephone
1st Contact
Vincent Schumacher
Senior Solicitor, Legal Team s9(2)(k)
s 9(2)(g)(ii)
Anthea Williams
Treasury Solicitor (Chief
Legal Advisor), Legal Team
Shel ey Hollingsworth
Manager, Commercial
s9(2)(k)
Performance
Minister’s Office actions (if required)
Return the signed report to the Treasury.
Forward a copy of this report to the Attorney-General (if the Minister Responsible for the Earthquake
Commission agrees).
Note any
feedback on
the quality of
the report
Enclosure:
Annex 1 and Annex 2
Annex 1 and 2 withheld in full s9(2)(h)
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Treasury Report: Update on Southern Response [Legally Privileged]
Executive Summary
s9(2)(h)
T2021/954 Update on Southern Response [Legally Privileged]
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Recommended Action
We recommend that you:
a
note the content of the report.
b
agree to refer a copy of this report
to the Attorney-General.
Referred/not
referred.
Minister Responsible for the Earthquake Commission
Anthea Williams
Treasury Solicitor
Shelley Hol ingsworth
Manager, Commercial Performance
Hon Grant Robertson
Minister of Finance
Hon Dr David Clark
Minister Responsible for the Earthquake Commission
T2021/954 Update on Southern Response [Legally Privileged]
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Treasury Report: Update on Southern Response [Legally Privileged]
Purpose of Report
s9(2)(h)
T2021/954 Update on Southern Response [Legally Privileged]
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s9(2)(h)
T2021/954 Update on Southern Response [Legally Privileged]
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s9(2)(h)
T2021/954 Update on Southern Response [Legally Privileged]
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s9(2)(h)
SRES’s readiness if there is a positive decision from the April hearing
28. We understand that SRES is currently in a good position to ‘go live’ with the proactive
package if decisions from the Court allow. This includes consolidating customer
records (from legacy systems), implementing technology that will allow the company to
contact customers quickly, having the approved communications to policyholders ready
to go, preparing a broader communications plan around statements for both the
company and Ministers, along with setting up the operational capability to handle an
influx of applications. s9(2)(h)
29. The Independent Oversight Committee is also up and running, and is working closely
with SRES on the settlements that the company can make at this time.
3 This may require the Crown formally taking over carriage of the proceedings from SRES.
T2021/954 Update on Southern Response [Legally Privileged]
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s9(2)(h)
T2021/954 Update on Southern Response [Legally Privileged]
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EXTRACT
Treasury Report: Southern Response: Draft Accountability Documents for
FY 2021/22
Date:
12 May 2021
Report No:
T2021/1199
File Number:
CM-1-3-112-0
Action sought
Action sought
Deadline
Minister of Finance
Agree for the Minister Responsible for the
21 May 2021
Earthquake Commission to sign and send the
(Hon Grant Robertson)
attached letter to the Chair of Southern
Response on behalf of shareholding Ministers
Minister Responsible for the
Sign and
send the attached letter to the Chair
21 May 2021
Earthquake Commission
of Southern Response on behalf of
shareholding Ministers
(Hon David Clark)
Contact for telephone discussion (if required)
Name
Position
Telephone
1st Contact
Lisa Wood
Senior Analyst, Commercial
s9(2)(k)
N/A
Performance
(mob)
Shel ey Hollingsworth Manager, Commercial
s 9(2)(g)(ii)
Performance
Minister’s Office actions (if required)
Return the signed report to the Treasury, with a copy of the signed letter
Minister Responsible for the Earthquake Commission’s office: Send the attached letter to the Chair of
Southern Response once signed
Note any
feedback on
the quality of
the report
Enclosure: SRES Draft SOI FY2021-22 (Treasury:4455682v1)
SRES Draft SPE FY2021-22 (Treasury:4455683v1)
SRES Draft Business Plan FY2021-22 (Treasury:4455684v1) Annex 3 withheld as out of scope of the request
Annex 1 Publicly available
https://www.southernresponse.co.nz/images/documents/Signed_FINAL_Sthn_Resp_-_2022-2026_Statement_of_Intent.pdf
Annex 2 Publicly available
https://www.southernresponse.co.nz/images/documents/Signed_FINAL_Sthn_Resp_-_2021-2022_Statement_of_Performance_Expectations.pdf
Treasury:4455359v1
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Treasury Report: Southern Response: Draft Accountability Documents
for FY 2021/22
Analysis
5.
The key strategic objectives identified are to:
b
implement the pre-October 2014 package (the Package) approved by Cabinet,
6.
Operationally, the two main areas of focus wil be resolving the remaining unsettled
claims and the implementation of the Package. For the first set of claims, the
Earthquake Commission (EQC) manages the claims as Southern Response’s agent,
whereas for the Package, Southern Response is setting up a separate unit inside the
company. As outlined in our advice of July 2020 (T2020/1848 refers), a separate
business unit within Southern Response, overseen by an independent committee, is
technical y and operationally best placed to implement the Package. The Package
implementation changes aspects of the internal functioning of the company from that
which has prevailed since its December 2019 restructuring.
The Crown Package
9.
In December 2020, the Government announced that Southern Response would be
responsible for the implementation of a Package for eligible policyholders who settled
with the company prior to October 2014. The company is preparing for the delivery of
the Package, which is currently being impacted by ongoing legal processes. The team
that will be stood up under unit manager, Anna Dobson, will have the appropriate
skillset and size to deliver the Package effectively and efficiently. The Package’s
implementation will be overseen by an Independent Oversight Committee (IOC), whose
members have already been appointed. The Treasury will continue to closely engage
with the company and IOC on behalf of Ministers as this process continues.
Treasury Engagement with Southern Response Regarding its SOI and SPE
10. From our review, we have provided feedback to Southern Response on three matters,
which they have subsequently agreed to implement. The three matters are:
c
Clarification of the definition of ‘timely’. In processing Package payments,
Southern Response proposed dealing with complaints in a timely manner. In the
interest of clarity, we suggested that Southern Response be more specific in its
definition of ‘timely’. Southern Response has agreed to further define ‘timely’ with
regards to dealing with Package payment complaints.
Liability Forecasts
12. Liability forecasts for FY 2020/21 (as at 30 June 2021) include:
a
the provision of $242.5 million for the Package payment. This includes a risk
margin of $31.6 mil ion and $6.6 mil ion in related claims handling costs. The
provision has been calculated by the company’s actuary, Finity as at 31 March
2021. The risk margin of $31.6 million (representing 15% of the central estimate)
has been established to provide at least 75% probability of sufficiency.
13. s9(2)(h)
T2021/1199 Southern Response: Draft Accountability Documents for FY 2021/22
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Mr Alister G James
Chair
Southern Response Earthquake Services Limited
[email address]
Dear Alister
Draft Statement of Intent and Statement of Performance Expectations for FY 2021/22
I also note that Southern Response is preparing for the implementation of the Crown’s package to
eligible policyholders who cash settled with the company prior to October 2014 (the Package). I
understand that you have made good progress in identifying and centralising the most recent contact
details for policyholders that may be eligible for the Package. I look forward to the implementation
strategy being further progressed once the High Court releases its decision.
Yours sincerely
Hon Dr David Clark
Minister Responsible for the Earthquake Commission
cc:
Casey Hurren, General Manager, Southern Response Earthquake Services Limited
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IN-CONFIDENCE
Reference:
T2021/1686 CM-1-3-112-2
Date:
29 June 2021
To:
Minister Responsible for the Earthquake Commission (Hon Dr David
Clark)
Deadline:
None
(if any)
Aide Memoire: Southern Response package query
We are aware that the Southern Response (SRES) Board and Independent Oversight
Committee (IOC) have received correspondence from s9(2)(a)
, a claimant
advocate, arguing that the Crown’s proactive package allowance for professional fees
should be increased to 10% for rebuilds that were originally designed with the input of
an architectural draftsman (rather than an architect). This contrasts with the percentage
that has been approved by Cabinet and currently employed by SRES since 1 October
2014 which is an allowance of 6% for non-architecturally designed homes.
In the event that you also receive correspondence from s9(2)(a)
(or face similar
suggestions from other advocates), s9(2)(h)
The principles for the proactive package were informed by the
Dodds case and aim to
place policyholders who cash settled with SRES before 1 October 2014 in a similar
position to those who cash settled with the company after that date. They were
developed fol owing a robust process and officials are confident that s9(2)(h)
. s9(2)(g)(i)
It was always anticipated that some advocates and homeowners may question the
scope of the package or use the package as an opportunity to raise other issues
regarding SRES settlements. However, it is important for the integrity of the package
that its scope is linked to its purpose, and that it does not attempt to address the myriad
of other complaints that policyholders may choose to raise (regardless of merit)1.
1 SRES does have some discretion to address individual mistakes that are discovered as a result of reviewing a
customer’s file for the purpose of determining package entitlement.
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Policyholders remain able to take other paths outside of the package.
The role of SRES, with IOC oversight, is to implement the package, pending approval
from the High Court to communicate directly with affected homeowners
. Any significant
alterations to the scope of the package would need to be approved by Cabinet.
Lisa Wood, Senior Analyst, Commercial Performance, s9(2)(k)
Shelley Hol ingsworth, Manager, Commercial Performance, s9(2)(k)
Treasury:4478960v1
IN-CONFIDENCE
2
Document Outline