What’s the real cost of that complaint?

An uninsured shock

Hannah’s Homes, a successful real estate firm in the North Island, renewed its insurance with Calamity Coverage (“Calamity”). Hannah’s Homes (“Hannahs”) had been a long term client of Calamity Coverage and paid it annual premiums of $8,000. As part of the insurance renewal, Calamity told Hannahs about its latest insurance product, employer liability insurance. Hannahs was interested in the employer liability insurance and asked for more details.

Calamity sent Hannahs two forms, one to renew its existing policies and another to add employer liability insurance to Hannah’s insurance package. Hannahs completed the renewal form only but, in its response, said it was glad the extra cover had been incorporated and asked whether Calamity had received everything it needed to update the policies.

To complicate matters, Calamity also increased the annual premium due to changes in market conditions; but Hannahs believed the premium increase reflected the addition of employer liability insurance to its insurance package.

Six months later a Hannahs’ employee had a personal grievance. Hannahs asked Calamity what it needed to do under its employer liability insurance cover. This was only the second time Hannahs had ever made a claim. Calamity was surprised and said employer liability cover hadn’t been added to Hannah’s insurance package because Hannah’s hadn’t returned the form.


The complaint

Hannahs complained that Calamity should have placed employer liability cover as it knew it was interested and, if not, it should have followed up with Hannahs directly which it hadn’t.

Calamity checked its insurance placement procedure. Calamity felt it had correctly applied its procedure and wrote to Hannahs. Calamity explained the law and said it was confident its legal position was correct and would not be making any payment.

Hannahs didn’t feel its complaint had been heard and s contacted FSCL.



When we called Calamity it said the complaint had had been resolved.

When we called Hannahs it explained that the employment matter had been small and it had been settled for under $4000. The employee concerned had left Hannahs and there were no ongoing issues.

Hannahs said the real issue for it was customer service; it did not feel that Calamity had listened to its needs at the time of insurance placement and this had been reinforced by how Calamity had dealt with Hannahs’ complaint.

After further discussion, Hannahs agreed to withdraw its complaint but said that it had decided it would not renew its business with Calamity because it had not handled the complaint well and was lacking in customer service. Hannahs said it had no trouble in finding a new insurance broker to work with.

Calamity lost a good customer and regular premium income of $8000 per annum because of how it had handled a $4000 dispute. In this situation, Hannahs wasn’t so concerned about the money, but it felt it hadn’t received a reasonable service for what it was paying to Calamity and had paid over a long period of time.



It is important to engage with and listen to a customer or client with a complaint. Sometimes being correct is not enough as there can be other interests, values and feelings that are important to acknowledge.

Handling a complaint in a well-timed, professional and reasonable manner can strengthen a relationship with a customer and increase value for both parties. Likewise, poor complaint handling can lead to loss of relationships, loss of business and an increased reputational risk.