Southern Response will pay between $300 and $400 million to more than 3000 insurance policyholders over Christchurch earthquake claims.
Lawyer Grant Cameron and his clients Brendon and Colleen Ross confirmed on Saturday afternoon they had reached a settlement with the Government-owned insurer.
The class action was cancelled in December 2021 at the request of the Rosses, the lead applicants, after they had signed an agreement with Southern Response weeks before.
The Government has also agreed that policyholders would receive their payments without them having to pay any legal fees or litigation funder’s commission.
Class members are starting to receive their payments.
The average payment is thought to be about $100,000, but some are more than $300,000.
It follows years of hard-fought litigation for quake-affected homeowners in Christchurch.
Brendan and Colleen Ross, the couple who represented the class, said they were thrilled with the landmark outcome.
“None of us could have afforded to bring legal action on our own and so all the power rested with Southern Response.”
The class action alleged Southern Response misled and deceived its policyholders when it settled claims before October 1, 2014, by sending people a cost estimate missing significant items of costs.
The agency announced a compensation package for claimants in June. If everyone who is eligible applies, it could cost taxpayers $313 million.
In August 2019, the company was found by the High Court to have "falsely represented" information, "edited" crucial documents and engaged in "misleading and deceptive conduct". It resulted in Canterbury homeowners receiving much lower insurance payments than they were entitled to.
The class action followed an earlier court victory against the agency when the court found it needed to pay back damages to Christchurch couple Karl and Alison Dodds.
The High Court found the couple had been misled about the cost of rebuilding their quake-damaged home.
The Dodds then settled for $895,000, which was considerably under the true estimate. They were awarded costs by the High Court of nearly $179,000.
Southern Response then appealed against that decision. But, in a ruling released in September 2020, the Court of Appeal dismissed that. The Crown decided not to pursue the Dodds’ case further.
It did, however, reduce the amount awarded to the Dodds by $10,656. Additionally, it threw out the Dodds’ own appeal claiming general damages for stress.
Then, a landmark decision in November 2020 allowed 3000 homeowners to take the class action against Southern Response.
That came after Southern Response tried to overturn a Court of Appeal ruling that an “opt-out” class action suit could be brought against it on behalf of former policyholders.
As an “opt-out” case, almost all policyholders were represented, rather than requiring people to actively sign on.
In December 2020, Southern Response gave hundreds of claimants proactive “top-up” payments.
Internal documents obtained by 1News in 2019 showed AMI insurance working with Southern Response project managers to make two versions of their analysis system in a way that kept some of the costs secret from its customers.
Southern Response is the government-owned company responsible for settling claims by AMI policyholders for Canterbury earthquake damage that occurred before April 5, 2012.