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  # 456440 7-Apr-2011 15:43
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South45: This is wrong. Taxpayers shoudl not be baling out companies or the big company (the country) will go the same way and we'd be taken over by Australia..... Hey! thats not such a bad idea!


The alternative is to potentially let a lot of people lose their homes, which would bankrupt many people. Instead the government gives AMI a loan until they get back on their feet. How is that so unreasonable?

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  # 456442 7-Apr-2011 15:46
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The best bet for an insurance company is one of the big multi-nationals, as they have heaps of re-insurance and events in New Zealand are but a blip.

Even the IAGs, Veros and QBEs are a lot more solid than the New Zealand ones.

Not matter who you are with, anywhere in the country, expect some healthy premium increases this year when renewal time comes around.

The acturaies and re-insurers are working overtime.

 
 
 
 


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  # 456476 7-Apr-2011 16:49
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The history of AMI is that it is the amalgamation of two separate companies that began life as NIMU and SIMU (North/South Island Motor Union) which originally were island specific. SIMU had it's head office in Christchurch - hence the very heavy exposure there. They "merged" in approx 1989.

For many years, you both signed a proposal for insurance and also separately signed a clause applying to become a member of the mutual company.

However, you can thank your lucky stars that somewhere in the late 1980's (can't recall the exact date), the mutual clause was amended so that members no longer assumed all liability if the company went to the wall. Imagine the hue and cry if you as a policyholder was having to dig into your pocket to cover other people's claims costs!

[edited to fix typos]

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  # 456486 7-Apr-2011 17:21

timmmay:
South45: This is wrong. Taxpayers shoudl not be baling out companies or the big company (the country) will go the same way and we'd be taken over by Australia..... Hey! thats not such a bad idea!


The alternative is to potentially let a lot of people lose their homes, which would bankrupt many people. Instead the government gives AMI a loan until they get back on their feet. How is that so unreasonable?


Even worse than that, if they just let it fail, it would cause people to not trust the systems that have been put in place to protect people. So insurance companies definitely should be bailed out if the need or situation arises. I believe in banks and insurance companies being covered by some guarantee, as under normal circumstances they shouldn't fail, and they are part of the backbone of the NZ economy.  These are not normal circumstances. I don't believe that they should be bailing out finance companies, as they are higher risk, and putting you money in the bank is not really investing it, but rather a safe place to store it. National inherited that deposit scheme from the previous government, and they had little choice but to extend the scheme and slowly phase it out, otherwise I suspect many others would have failed and all in one go. I suspect the extension  may just delay the inevitable though, rather than fix a problem.

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  # 456500 7-Apr-2011 18:35
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Since AMI is a mutual company, bailing it is a fairly palatable policy for the general public. I wonder how this would have gone down if it was privately owned, there would certainly be a lot more debate about it.

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  # 456517 7-Apr-2011 19:21
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Another NZ company that can't manage it's self. They under invested in insurance cover thinking that all they would be paying out on is idiots who drive cars into garages with bikes on top. They took a gamble and lost and now the NZ tax payer is bailing out another company..

I suspect that someone like Tower will buy them out if we're lucky..




Regards,

Old3eyes


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  # 456522 7-Apr-2011 19:35
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Never ceases to amaze me the way people react to these situations. OMG I have to leave. Yes that will help.. NOT. It makes the situation worse. Anyone with half a brain would have realized they weren't going to go under, someone would have bought them and the GOVT would have saved the day. It's actually pretty rough to pin this entirely on bad management etc, as there is no way you could imagine not one but two MASSIVE disasters, it would tax any financial institution, including the GOVT which is borrowing massively to cover it's part. Insurance reassurance is based on percentage of risk vs policy holder base, statistically they were fine.

I think people need to chill out a little and stop being so critical/irrational , it's not an easy situation.

Sending out a mass letter, what a brilliant idea, start a mass panic, thousands of people calling asking to cancel policies and get their money back, which would have created an even worse situation..

 
 
 
 


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  # 456546 7-Apr-2011 20:45
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networkn: Sending out a mass letter, what a brilliant idea, start a mass panic, thousands of people calling asking to cancel policies and get their money back, which would have created an even worse situation..


Sending out a letter to shareholders is common enough when companies start getting negative media. Policy holders are the owners and media rumours about the financial impact on AMI and concerns over whether it had enough capital to cover claims have been circulating since September. AMI policy holders are probably more aware of these stories than the average person. How many people do you think got nervous and changed companies by now? 

They got bad press in September by refusing to re-insure Chch people who had claims. The February concerns over whether they would survive, the March downgrade and going on a watch with negative implications - c'mon, common sense says a letter to policy holders was called for. 

I'm sticking with AMI when my policy comes due in two months, unless something catastrophic happens by then. Or unless they sell out to Tower, in which case I'm gone. I'd rather stick with a NZ company that doesn't have the commercial imperatives of satisfying shareholders before customers. At least they don't have to contend with fallout from international disasters like snow in Europe, floods and cyclones in Australia, etc etc. 

We can criticise all we like but the simple fact is no insurer could have predicted two major quakes in six months. Did they make a mistake in not raising premiums to get increased re-insurance cover? Maybe, but hindsight is a wonderful thing and losing customers due to increased costs might have made the current situation worse. 

All this fuss over a bail-out. All it is at this stage is a guaranteed back-up plan. If its needed its there. If its not then taxpayers won't be needed to help keep it afloat. Ultimately, if AMI failed the costs would come back onto taxpayers anyway. 

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  # 456550 7-Apr-2011 20:53
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The letter would not have achieved anything, as they didn't know anything. If they had sent a letter stating concern, people would have knee jerk reacted and created a situation which may or may not have naturally occurred. If they sent out a reassuring email and ended up in trouble they would have been lambasted for lying to investors and policy holders, and if they had sent out a neutral letter, people would have panicked (see above). I think the number of nervous people who changed would be in the massive minority, people are generally not going to do something that requires effort unless strongly compelled.


The other stuff you wrote more or less reflects my own sentiment. Good on you for sticking it out.

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  # 456628 8-Apr-2011 08:20
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Elpie: I'd rather stick with a NZ company that doesn't have the commercial imperatives of satisfying shareholders before customers. At least they don't have to contend with fallout from international disasters like snow in Europe, floods and cyclones in Australia, etc etc.


I don't know a company anywhere which has shareholders and is not responsible to the shareholders before the customers.

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  # 456883 8-Apr-2011 22:53
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Elpie: 
I'm sticking with AMI when my policy comes due in two months, unless something catastrophic happens by then. Or unless they sell out to Tower, in which case I'm gone. I'd rather stick with a NZ company that doesn't have the commercial imperatives of satisfying shareholders before customers. At least they don't have to contend with fallout from international disasters like snow in Europe, floods and cyclones in Australia, etc etc. 

We can criticise all we like but the simple fact is no insurer could have predicted two major quakes in six months. Did they make a mistake in not raising premiums to get increased re-insurance cover? Maybe, but hindsight is a wonderful thing and losing customers due to increased costs might have made the current situation worse. 

All this fuss over a bail-out. All it is at this stage is a guaranteed back-up plan. If its needed its there. If its not then taxpayers won't be needed to help keep it afloat. Ultimately, if AMI failed the costs would come back onto taxpayers anyway. 


100% agreed. so many armchair critics and doomsayers. i will always support local companies. there is nothing wrong with bailout (if needed) as what happen to AMI is NOT a result of poor fund management or corruption. this happen because of MAJOR earthquake(s) who nobody has control over it.

i dont like insurance as it is a form of gambling but for the sake of helping AMI, a NZ company, and KIWIs who worked there, i am going to buy contents policy.

http://www.ami.co.nz/media7April/ 





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  # 456885 8-Apr-2011 23:12
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Funny that - I would call not having insurance as a form of gambling!! Insurance is about removing a risk - not having insurance is taking a risk.......

nakedmolerat:
Elpie: 
I'm sticking with AMI when my policy comes due in two months, unless something catastrophic happens by then. Or unless they sell out to Tower, in which case I'm gone. I'd rather stick with a NZ company that doesn't have the commercial imperatives of satisfying shareholders before customers. At least they don't have to contend with fallout from international disasters like snow in Europe, floods and cyclones in Australia, etc etc. 

We can criticise all we like but the simple fact is no insurer could have predicted two major quakes in six months. Did they make a mistake in not raising premiums to get increased re-insurance cover? Maybe, but hindsight is a wonderful thing and losing customers due to increased costs might have made the current situation worse. 

All this fuss over a bail-out. All it is at this stage is a guaranteed back-up plan. If its needed its there. If its not then taxpayers won't be needed to help keep it afloat. Ultimately, if AMI failed the costs would come back onto taxpayers anyway. 


100% agreed. so many armchair critics and doomsayers. i will always support local companies. there is nothing wrong with bailout (if needed) as what happen to AMI is NOT a result of poor fund management or corruption. this happen because of MAJOR earthquake(s) who nobody has control over it.

i dont like insurance as it is a form of gambling but for the sake of helping AMI, a NZ company, and KIWIs who worked there, i am going to buy contents policy.

http://www.ami.co.nz/media7April/ 




Mark Ascroft
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  # 456888 8-Apr-2011 23:31
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I am sticking with AMI at this stage. Cant see any reason not to. Very unfortunate that Christchurch people supporting a Christchurch company has lead to problems. Would be surprised if there is any hint of mismanagement, just bad luck really. The government has been watching this closely for sometime I would guess, and are obviously keen for the company not to fold.
Unrelated question I suppose. How would the EQC get on if there was a third earthquake?

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  # 456897 8-Apr-2011 23:53
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1080p:
Elpie: I'd rather stick with a NZ company that doesn't have the commercial imperatives of satisfying shareholders before customers. At least they don't have to contend with fallout from international disasters like snow in Europe, floods and cyclones in Australia, etc etc.



I don't know a company anywhere which has shareholders and is not responsible to the shareholders before the customers.


Say hello to AMI then. AMI is a mutual. It doesn't have shareholders - the "owners" are the policy-holders. Companies that have shareholders are responsible to them. In a mutually-owned entity, like AMI, this is not the case.

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  # 456898 8-Apr-2011 23:57
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Beavis: How would the EQC get on if there was a third earthquake?



I'd say - very badly. With all the fuss over AMI people are overlooking the noises that EQC could be in trouble with getting reinsurance. We don't even need another earthquake for EQC to bottom out. Just another flood or any other act of nature it covers. 

The government can't properly manage insurances. ACC is a mess. EQC is not much better. Let's hope AMI don't need the government bail-out because if ACC & EQC are any indication, the government getting its hands on AMI would be a disaster in itself. 

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