Category: NZACS History & Purpose

NZACS – A Short History 1972 to 2022

Prior to the collapse of the West Gate bridge in Melbourne on 15 Oct 1970, common law had expanded contractual liability to others who did not have a contractual relationship with a plaintiff.  [Donaghue v Stephenson 1932 (Snail in the ginger beer bottle)]  The West Gate bridge designer and bridge constructor were each seen as having considerable exposure to legal liability under both contract and tort. 

With this background threat looming, NZACS was established in 1972 as a co-operative society under the Industrial and Provident Societies Act 1908, to be owned and managed by architects, and to provide its members with a vehicle for the purchase of high quality, group professional indemnity insurance, on a voluntary basis. 

The model chosen followed a similar scheme initiated by CEAS (the consulting engineers) a few years prior, with Denis Adam as the insurance broking catalyst.  Throughout the formation phase and for many years following, his vision and involvement in the insurance industry was vital to the establishment and ultimate success of NZACS.

The founding directors and key initiators involved in establishing NZACS were Bruce Girdlestone, Graham Kofoed and Stuart Mitchinson.  A proposal was taken to the NZIA Council for support, and they agreed to underwrite the legal preparation of the Society’s rules and registration costs up to $1000. 

By year nine, NZACS membership totalled 187.  There had been 178 claim notifications and of these, 53 remained open awaiting settlement.  (By comparison, NZACS’s current membership is about 800 firms with a further 50 associate members.  These typically register about 120 new claim notification annually).

During the first 15 years of operation, the directors took no payment for the considerable time they committed to the affairs of NZACS.  To them goes the gratitude of past and present member firms and the profession for their vision, drive and commitment in establishing NZACS. 

A central vision of NZACS had always been for architects to be the “first responders” when members notify a claim.  This has been achieved by having a “Claims Committee” of experienced architects available to provide assistance to members facing a claim, and an architectural view on matters to lawyers and insurers.  That strategy has enabled claims to be settled on the best terms for both the insured and the insurers, and has gained a long-term commercial advantage in negotiating appropriate policy terms and premium costs.

From the outset, NZACS has been active in a wide range of matters affecting risk management and liability in relation to architects.  This has included liaison with both NZIA and NZRAB;  review and submissions on contract terms for construction and for engagement;  likewise for government procurement terms and pipelines, legislation and regulation;  and in providing education, publications and the promotion of risk management in the profession and in allied tertiary education courses.  NZACS was a founding sponsor and stakeholder in the Professionals Superannuation and Benefits Group (PSBG) and maintained a Board presence until the scheme was overtaken by KiwiSaver in 2013.

It had always been the intention of the original directors to acquire sufficient operating and investment capital to establish an insurance company similar to that operated by CEAS.  In 1982, with a capital of $200,000 and the placement of $1m with the Public Trustee as required at that time, Acanthus was set up as a wholly-owned insurance company, with Graham Kofoed as chairman.  The NZACS directors became ex-officio directors of Acanthus.

The notes for inclusion within the Memorandum of Association and Articles of Association included the following statement:-

“A suggested name (from Bruce Girdlestone?) which has been received with some enthusiasm is – The Acanthus Insurance Company Limited.  Acanthus is a word associated with a measure of romantic architectural tradition, neither supporting nor opposing any form of insurance the company may operate, but its architectural flavour is readily discernible.”

Acanthus enabled a saving of PI costs to members by taking on the risks of the numerous low-value claims, while the insurance market got a smaller slice of the revenues and covered the fewer larger claims.  It also gained some leverage over how policy terms were negotiated and claims settled.  

To succeed, Acanthus needed to diversify its risk, spread its investments and increase its market share.  Investment returns can be problematic, and cyclic, especially when long-tailed claims settlement occurs at a time when architectural fee incomes are low and premium payments based upon fee income are also low.

To that end, NZACS became involved with ARMS, a similar newly-formed co-operative of Melbourne architects.  Victorian legislation required all new residential construction to be fully insured against legal liability risks, and for disputes to be referred to a Disputes Tribunal.  After a couple of years it became apparent that expert witness and administration costs often exceeded the damages sought or awarded, and Acanthus withdrew.  It did, however, continue with profitable reinsurance arrangements with kindred societies here and overseas, and in independently managed investments.

Following the collapse of some insurance companies here and in Australia and elsewhere, the Government introduced the Insurance (Prudential Supervision) Act 2010.  The resulting increase in compliance costs without commensurate benefit has led to the decision to wind up Acanthus in 2022/23.  NZACS will continue the PI insurance arrangements with Aon and our external insurers, and the claims committee will continue in its existing role.

NZACS is a co-operative – run by and for its members – and is proud of its 50 years of service and membership support.  We aim to – and expect to – maintain our position as the trend-setters in architectural PI policy terms and the largest participant in the NZ architectural PI insurance market.  

NZACS/Acanthus:  Directors and Officers

Kendons have been our board secretary and accountant and Aon our insurance broker and insurance advisor since 1983.

The founding directors and key initiators involved in establishing NZACS were Bruce Girdlestone, Graham Kofoed and Stuart Mitchinson.  Bruce and Graham were practising Architects;  Bruce a partner in the firm of Girdlestone & Mitchell in Lower Hutt while Graham was a partner in Kofoed Kenny & Partners in Wellington.  Stuart Mitchinson, after a career in the Ministry of Works, during which time he also edited the NZIA Journal (now Architecture New Zealand), was the then-director of NZIA. 

Three other initial architect directors were David Sayers, of Gillman, Garry, Clapp & Sayers of Hamilton;  Hal Wagstaff (also a yacht designer, who maintained he could keep water out of his boats but not his houses) of Wagstaff and Cockcroft, Wellington;  and Arthur Williment of the Haughton Partnership, Wellington.  To complete the registration process, a seventh signatory was required and this was E. V. (Jim) Dawson, of King and Dawson, Wellington, the then-chairman of the Architects Registration Board.

Bruce Girdlestone was elected the first chairman and Graham Kofoed appointed as the first claims director.  Alan Purdie, the then-secretary of NZIA, also served as the initial secretary of NZACS.

Directors since 1978 have (more or less chronologically) included Alan Fairhead, Gib Pinfold, Peter Wixon, Barry Dacombe, Barry Millage, Graham Strez, Gerry Hodgson, Brian Dodd, John Sutherland, Colin Orchiston, Deb Cranko, Tom Dixon, Hamish Wixon, Malcolm Bowes, Jane Aimer, Alec Couchman, Melanie Lochore, Peter Marshall, Michael Davis, Natasha Markham and Matthew Mitchell.  Graham Strez retired in 2022 after serving on the Board and the Claims Committee since 1983. 

Liaison with Government & Consultant Groups

Over the past year or so, NZACS has been represented on consultative groups formed by MBIE to formulate government procurement policies in the building industry, the standardisation of special conditions of contracts across different departments, and discussions on risk-based consenting and self-certification; we have had quarterly liaison meetings with MoE; and we have met with CEAS, NZIA and NZRAB representatives to air matters of common interest and concern.