Phil Newland, director of Kiwi litigation funder LPF Group, is calling for a public inquiry into the conduct of large insurance companies in New Zealand, saying a close examination of the “abusive behaviours and tactics” used by the companies to escape liability is “well overdue.”
Newland said that instead at looking at the merits of the claims and meeting their contractual obligations under the insurance policy, “powerful Australian-owned insurance companies, such as QBE and IAG Insurance, use their financial muscle to overwhelm, undermine, attack, and challenge the validity of litigation financing as a way of funding a court action – leading to increased costs and delays.”
In a statement, Newland noted in particular how QBE challenged the legitimacy of litigation-funding arrangements in the case against directors of failed construction company Mainzeal by relying on the now-discredited judgment of Chief Justice Dame Sian Elias in PwC v Walker last year.
The case saw Elias, who has a financial interest in IAG, making a provisional judgment that raises questions about litigation-funding agreements – an area not disputed in the case, Newsroom reported.
Newland said insurance companies, and the directors and organisations insured through them, know and take full advantage of the fact that “the majority of the people who are seeking to get compensation and accountability through insurance companies… can’t afford litigation let alone lengthy court battles without help from funders.”
“The collapse of Mainzeal was one of the largest in New Zealand’s history and left creditors, many of whom were put into serious financial difficulty, out of pocket by over $117 million,” Newland said. “This attack by QBE Insurance is typical conduct by a major insurer to avoid the actual merits of a case being heard in court.”