Natural Hazards Insurance Bill

Kia ora, Madam Speaker. After such a notable bill it may seem that this is perhaps not as important, but I must say I am very happy indeed to be speaking on this Natural Hazards Insurance Bill. You know, strange as it may seem, we all come to this place with some ambitions. One of mine was not particularly glamorous, but it was to make sure that the maltreatment of New Zealanders after natural disasters, that I saw in Christchurch and elsewhere, never happened again. And I actually said in my maiden speech that insurers, and the Earthquake Commission (EQC), didn’t look after people. They didn’t look to their legal obligations; they looked to their risk exposure and they used a law not as a guide but as a weapon. This bill is an important step to address that change. The Earthquake Commission as it is today is a wildly different thing than it was then, and this bill takes it this step further.

The Labour Party, when it took office in 2017, committed to a public inquiry, and Dame Silvia Cartwright undertook that inquiry and reported back in March 2020. This implements large parts of that inquiry. I would also note we established the Greater Christchurch Claims Resolution Service, the earthquake tribunal, and the EQC On-sold programme—just part of the raft of things that this Government is doing to right the wrongs of the past that happened in Canterbury. So this bill is a further step in making sure that the heartbreak and unfairness that happened in Canterbury is not repeated, and it further meets those requirements in the Cartwright review.

It’s really important to note that, at the heart of this bill, the Natural Hazards Insurance Bill, is collectivism. Whilst the insurance market works well most of the time for most of the people, the fact is that in some cases it fails. It fails when the catastrophe is so large that the balance sheet of even the largest insurer can’t manage it, such as AMI showed us, and Western Pacific, and Ansvar—all failed insurance companies after Canterbury. The insurance market also fails when it simply refuses to insure on commercial terms because their actuary tells them that it’s not economic to underwrite those risks. But here in New Zealand, we think that the insurance of homes is too important to leave to the market alone.

So, since the Earthquake and War Damage Act 1944, we’ve had a social contract that across New Zealand we will share the risk of loss to homes, and after the Abbotsford slip in ’79, we also insure the land underneath them. Our land is subject to many hazards, and it’s entirely reasonable that we spread the risk of those hazards evenly across all homeowners. And with that cushion, there is the expectation, an important expectation, that insurers will step up and offer comprehensive natural disaster insurance to all homeowners at an affordable price.

The Canterbury earthquake insurance sequence showed that EQC badly needed updating, and the most obvious update here is the significant increase in the amount of natural hazard insurance. In 2011, it was $100,000, and this will raise it to $300,000. Still not enough—importantly to note—to replace entirely an average home. But it is a substantial sum, and it’s likely that the new entity Toka Tū Ake—the Natural Hazards Commission—will bear far and away the greatest part of any underwriting cost after a natural disaster or catastrophe.

The other thing, that might slip past some, that struck me about this bill, is a real shift in accountability. The culture of EQC in 2011 was to use every device to limit their exposure and liability. Now, Toka Tū Ake will have a code of insured-persons’ rights, a complaints management procedure for breaches of that code, and an independent review process if that isn’t resolved correctly. And also, an independent dispute resolution scheme for what are, essentially, insurance disputes about the settlement process itself. This is an absolutely seismic shift from the wall that homeowners faced when they were unhappy—often justifiably so—with EQC.

As someone who worked through a raft of detail of EQC claims, a lot of the other changes are also very, very welcome—like, for example, the difficulty in measuring land damage when land subsides. The bill puts into legislative form the diminution of value framework—evaluation based not just on the costs of repair to land but on the value that it’s lost. And of course, multi-unit dwellings were an absolute nightmare, where there’s shared areas and common areas, party walls, and the like—can be very problematic—and the bill clarifies that as well.

Having said that, this is not absolutely perfect. I am sure we will get lots of submissions, and I admit I lobbied the Minister David Clark that this gets sent to the Finance and Expenditure Committee because I take a personal interest in it. One issue that I’m looking forward to exploring is the standard of repair—a familiar framework is used to costs reasonably incurred to replace or reinstate the property to a condition substantially the same as when it was new, using current materials and meeting current building standards. That can throw up some tricky situations—for example, where a house was dilapidated, or where it’s a very old house using older materials, or even a modern house using unusual architectural techniques, or where the damage is minor but the costs of repair are wholly disproportionate. So those are some of the issues we may need to explore.

There’s also changes to cover for bridges, retaining walls, and culverts. It used to be depreciated value, which was very unfortunate if you had a perfectly good 100-year-old stone wall whose depreciated value was pretty much zero but it was perfectly sound, but the insurer would not pay out on it, or EQC would not pay out on it. The bill clarifies this by using replacement cost, but it does cap the value at $50,000, and at $25,000 for bridges. That also needs to be understood, because $25,000 won’t pay for a significant bridge, or even a small one in many cases, and certainly $50,000 won’t pay for a significant structural retaining wall. So we need to understand how that will fit in with private insurance, and explore where we need to go with that.

Look, for some people these matters are exceedingly dull, when you’re considering them in advance in a technical manner, but I can tell you that, if you have a broken home and you can’t rebuild it without fixing the retaining wall and you don’t have the money to fix the retaining wall, it is heartbreak. It is a personal catastrophe. So getting this right now isn’t just about crossing t’s and dotting i’s, it’s about getting it right to cushion the blow for homeowners and ensuring we’re prepared for the next—and absolutely inevitable—catastrophe. I commend this bill to the House.

Thank you, Mr Speaker. It is a pleasure to speak on this Natural Hazards Insurance Bill. As my colleague Gerry Brownlee said yesterday, the National Party actually welcomes this bill. I too have had quite a bit to do with the earthquakes and the Earthquake Commission (EQC) over the years, and I think the one thing that we can all agree on is that EQC didn’t do a stellar job. There were a whole lot of issues that occurred during, certainly after, the Christchurch earthquake series. There was a lot of change that occurred between then and the Kaikōura earthquake, and it worked very well, but it was a much smaller event. I’ll put it to the House that, actually, the next time there’s a really large one, we will end up with similar issues, because there will be gaps and these things don’t get tested until there is a really big event. Each event has its own characteristics and it causes damage to a community in different ways. This bill is going to go a long way to fix all the gaps that we’re aware of, but I’m certain that we will be back, or the House will be—it might not happen for 50 years, or longer, who knows, but it could happen tomorrow. So getting this done is a really good step forward. We support that.

My colleague Gerry Brownlee said there were over 700,000 claims from the Christchurch series of earthquakes. It’s a massive undertaking. There were certainly some big issues because of the managed rebuild and the way that was managed, and there was some bad behaviour by contractors, which has come back to bite a lot of homeowners, and that’s certainly a very serious issue. In fact, I’m working on a member’s bill that might actually avert some of those issues in the future. But that’s another story.

This bill goes to set up new definitions around land damage—where the barriers lie. I think that’s a really important thing to do. That caused a lot of issues in the Christchurch one and, indeed, in the Kaikōura earthquake. I do note in clause 42 that the maximum land cover amount for residential land—and it goes down into “(1)(b)(ii) the number of dwellings in the residential building multiplied by $50,000 plus GST;”, and then damage to bridges and culverts in residential buildings, the lesser of “(1)(c)(ii) the number of dwellings in the residential building multiplied by $25,000 plus GST.” I look forward to understanding, through the select committee process, where these numbers came from, how they were calculated, and if they are adequate. What really worries me about this, and the cap that’s gone from $150,000 to $300,000 under this bill, is we’re in a cost of living crisis in New Zealand at the moment, with rampant inflation. It’s only going to get worse. How long are these numbers going to remain valid? Should they be linked to the Consumers Price Index, or the building cost inflation at least? I don’t know the answers to those, but I’m sure that we will hear quite a bit about that during the select committee process. These things all need to be teased out.

The bill allows the new Natural Hazards Commission to raise reinsurance against different hazards other than earthquakes, and I think that’s a really interesting proposition for several reasons. One, if we can just—the $300,000 rise in the cap is significant. The Christchurch earthquake sequence was—private insurers paid out $21 billion, EQC paid out $10 billion. EQC were already the largest single reinsurance buyer in the world for these types of events, and now they are going to go up by three times, effectively. So that is a massive amount of reinsurance. How will the reinsurance market react to that? I don’t know. I suspect it’s a big buy. They’re going to have to look for a much wider spread of reinsurance than they perhaps have at this stage, but most of the reinsurance goes through one centre. So, I mean, I really look forward to learning more about that during the committee stage, because it’s a really important issue. And it has been raised when we did these other series of legislation in the last term. That was an issue. And so there must be quite a bit of information about that, and I certainly want to hear about that. That is a really important area.

Expanding EQC to other natural hazards does raise some questions with me. There is a scheme in the UK called Flood Re, which is to deal with flood-prone housing in particular. It’s, effectively, what EQC is doing: socialises the cost of insurance across the whole market. The problem that they have with is that is that it, effectively, locks people in to areas which are flood-prone when, actually, the better long-term solution would be, in the really worst places, to have a managed retreat from those areas. I mean, we can think of Westport, where we’ve had several floods there recently. That’s a very serious issue, and maybe we should be looking at that. I don’t want to see EQC expanding their mandate to cause people to be locked into those homes—

💬 Dr Duncan Webb: We already cover floods. It hasn’t changed.

—that have already dealt with several floods and will have to deal with that again. I think that’s a real issue, and I’m surprised it hasn’t been raised by the member on the other side, because he certainly had a bit to do with it. I thought he’d be all over that. But it is a serious issue, and I think that’s something we have to consider.

There’s quite a lot of information-gathering powers here, and we just really have to know and understand whether the unfettered access to information that the commission will have—is that really necessary? I don’t know. I don’t see any justification, in the information provided, for that amount of information being gathered. And where is it going to be spread out to? I don’t know. And who’s going to get it? It is, as I said, unfettered in the bill as it stands. I look forward to debating that. So that’s an important one.

This is a minor one, although it could be quite important. I think it’s clause 23 where it defines the events that would be covered by the commission. It doesn’t include meteor strikes—a very unlikely event, but it is something that can and does happen. Meteor strikes, actually, are covered by reinsurance, and most—not all, but some—existing insurance policies do cover meteor strikes. If we are going to have a sort of socialised insurance cost, surely that would be one of the things that should be covered.

The other important issue, about the increase of the cap from $150,000 to $300,000, is the impact it’s going to have on people’s insurance bills. Particularly in this place here, where we are, in Wellington, there is going to be a significantly lower cost for people living in high-risk areas. However, far more people are going to be affected by having higher insurance costs, because they live in lower-risk areas. The reason for this is because the private insurance area which is covering the cost currently from $150,000 upward is based on a risk-based pricing model. Therefore, the risk is assessed in the premium, and, from my information, those people living in a low-risk area—say, in Northland—could be saddled with up to a $200 increase in their premium. So we’re socialising that cost across New Zealand. Yes, the people in Wellington Central will benefit from that, but I would put it to the House that the people in Northland will be disadvantaged. So I’m looking forward to teasing that out in the select committee, because—I’m sure the people of Northland won’t feel too bad about me saying this, but, actually, they have much lower incomes than people in this part of the world, and there are already social difficulties in that part of the world. I have great concern for that, being in the National Party. We do care about these matters.

It’s with that that I do commend the bill to the House, with the caveats that I have just laid out before you. Thank you.

Thank you, Mr Speaker. Just leading on from the previous two speakers, I think it’s important when we look at the Earthquake Commission (EQC) to look at what it doesn’t cover currently. It takes a disaster for people to get rather nasty surprises. For example, it doesn’t cover intangible property—for example, information stored on a computer; motor vehicles, or parts or accessories of motor vehicles; trailers, or parts or accessories of trailers; boats or other vessels, or parts or accessories of boats or vessels; aircraft or anything in or on an aircraft; bushes, forests, trees, plants, or lawns; growing crops; explosives; animals; roads; streets; drives, or paths. Well, of course, we’ve already heard one of the previous speakers say that some of that is going to be addressed now—drains; channels; tunnels or cuttings; dams; breakwaters; fences or poles; reservoirs; swimming pools; baths; spa pools; tanks or water towers; tennis courts; jetties, wharves, or landings; paving or other artificial surfaces.

So one can imagine that after a disaster such as that which struck Christchurch, that which struck Kaikōura recently—although, I do have to say the Kaikōura earthquake was as much the Wellington earthquake as it was the Kaikōura earthquake; just, of course, Kaikōura claimed it much earlier. But when one looks at those things, rather than guaranteeing a surprise following a disaster, it is absolutely appropriate that we look at the legislation, look at what we’ve learned. After all, New Zealand is a country that, in many parts, is actually defined by its earthquakes. We have the member for Napier in front of me. The Napier earthquake caused a whole city to be rebuilt—the fact it was rebuilt quickly so Hastings wouldn’t get a start on them is neither here nor there, but, of course, the Napier earthquake is something that looms large. I know, growing up on the West Coast, the Murchison earthquake was something that loomed large. The Īnangahua earthquake, and, of course, Christchurch and Kaikōura latterly. In fact, just while I do speak about the Wellington earthquake, the fact that there was so much damage in Wellington—I know that I was offshore when the Kaikōura earthquake occurred. I had no idea of just how much damage had been caused to Wellington, and still today there are buildings which are being affected. That list which I actually read through—people are getting nasty surprises.

So it is apt and timely that we now look at the lessons that we have learnt, and, of course, the inquiry recommendations, we’re now putting them into practice, because now the Natural Hazards Insurance Bill will cover damage covered by landslips, volcanic eruptions, hydrothermal activity, and tsunami. What is interesting, of course, is that what started out as the earthquake and war damage—war damage has actually dropped off. Now, as the world looks at the possibilities of us slipping into another world conflict, it’s time that we did have a look and make sure that we are actually included. So, of course, it was actually the War Damage Commission up until the 1940s. It was the Wairarapa earthquake that actually did bring about the need to ensure that those houses that weren’t able to fixed following that 1942 earthquake—there was requirement for a bill like this.

So it gives me great pleasure to be—knowing the generosity, the eagerness of our committee chair to stand and wave his hand when the decisions were being made about where this bill would go. I think such is the gravitas of the Finance and Expenditure Committee chair that he was able to ensure that it does come to our committee. I look forward to having it, and I’m sure that with our collective experience we can send this back to this House in an improved, relevant, and, more importantly, in a state that New Zealanders—knowing that it is only a matter of time before we get the next big one, then at least this aspect of it will be covered. So I commend this bill to the House.

Tēnā koe, Mr Speaker; thank you. The Green Party is pleased to support the Natural Hazards Insurance Bill. At 89 pages, it’s reasonably complex and technical, and it replaces the Earthquake Commission Act 1993. Having lived through the Canterbury earthquake series, this bill seeks to learn the lessons, takes on board quite a number of the recommendations—around 10—from the very thoughtful and accessible report that Dame Silvia Cartwright did in her inquiry into the whole way the Earthquake Commission (EQC) had operated, and also the 2015 public consultation that was done then. So there’s been a really good basis of policy analysis and development to come to the House with this bill.

So anyone who insures their home or other residential building, such as a rental property, against fire can access EQC cover in the event of a natural disaster because the levies that they pay to the insurance company are then passed on to EQC and into the Natural Disaster Fund. It’s this point—which Duncan Webb also made—that because EQC is taking that first loss with the private insurers picking up the balance, it makes insurance against natural disasters much more affordable in New Zealand Aotearoa and much more certain than overseas, where people are often having to rely on their Government after a natural disaster to provide funding, support, and assistance. Because it’s much more affordable, the insurance cover is that much more widespread here.

So this certainty, and the fact that we have EQC, does really improve the ability of people and communities to recover from natural disasters. As Dame Silvia Cartwright said in her April 2020 report, regardless of people’s views of how EQC had performed in the 2010-11 Canterbury earthquake sequence, New Zealand is very fortunate to have a natural disaster insurance scheme backed by the Government.

So, as others have said, there were more than half a million claims to EQC after those Canterbury earthquakes, and even though the commission took on board an extra 1,000-odd staff, it was totally overwhelmed by both the number of claims and also the efforts to roll out a managed repair process where EQC took all the responsibility for managing those repairs and doing it on a mass scale. That led to some pretty horrendous experiences for homeowners, long periods of negotiation with EQC and insurance companies, and as Dame Silvia also noted, previously EQC had been regarded as being a helpful and supportive face of the Government, but after the earthquakes, it was seen to be—and I quote—“uncaring, miserly and inefficient”, and people saw it often as being sort of dominated by financial objectives, seeking to minimise the costs for the Crown in claims management and settlement. Since then, of course, there have been a number of quite significant operational changes by EQC and how it works, both with claimants and with private insurers: the transfer of contents to private insurers; it’s developed a toolbox of options for recovery; it’s established a hub for claimants to access information; it’s sought to ensure that there’s one point of contact for people making claims and resolving their claims; and it’s developed a much better partnership with private insurers.

So this bill makes some really significant changes, and one of them is that it took the Labour Government in the first term to establish a Greater Christchurch Claims Resolution Service because otherwise people were being forced to go to the courts. This bill makes sure that there is an independent dispute resolution service so that people don’t have to go to the courts, and it requires EQC to participate in that standing dispute resolution scheme. It also provides certainty around matters that a claim to the commission can be assigned if the house is sold. It provides a very clear statement of the commission’s repair standard for both buildings and land cover, and again, that will help address the issues that arose in Ōtautahi Christchurch around EQC’s performance. It also deals with things like mixed-use buildings. How do you decide, when you’ve got an apartment, maybe on floors two and three of a building and then a retail premises on the ground floor, who covers what in relation to repair of the foundations or the roof? The equity issues for owners of mixed-use buildings mean that those claims were often very complicated and took quite a while to resolve, and would sometimes have required court action. So the bill does make some more consistent guidelines around that.

Probably the biggest thing that householders will appreciate about the bill is the increase in the cap from the present $150,000 plus GST to $300,000. That means that the Government is taking on more risk from private insurers, and it also recognises the much higher costs now for building repair. That’s beneficial because, again, it makes insurance more affordable. Stuart Smith raised the point of making sure that this was tied to the Consumers Price Index, but as I understand the bill there are some new provisions in it around financial governance to make sure that premiums are reviewed so it will keep up to date. The levy wasn’t reviewed between 1944 and 2012, and the insurance cap wasn’t reviewed between 1993 and 2019. So, of course, those got completely out of date. So the bill is setting in law a process for this to be regularly updated at least every five years, and some criteria that the Minister must use in going through this updating process, making sure that it is transparent by requiring a funding and risk management statement to be released after each review of the financial settings, and this is all based on something similar that applies to ACC—so, again, much more accountability and transparency around financial governance and ensuring that EQC is adequately resourced, able to seek reinsurance, and is in a sound position to respond to further natural disasters.

This is an area where, as others have noted—and I think the National Party was slightly mistaken in thinking that, by changing the name of the commission to the Natural Hazards Commission Toka Tū Ake, the range of hazards which are covered is being expanded. My understanding is that the range of hazards stays the same, but this is where the issue potentially arises with things like sea level rise. There will be pressure on the Crown to expand the range of hazards which can be covered, because how do we as a community ensure, as we’ve done with EQC, that that cost of recovery is shared across the community and doesn’t just fall primarily on those who are affected. Things like the increased risk of flooding—yes, EQC covers damage to land from flooding, not damage to buildings from flooding. There will be more conversations, I think, around this and how that risk is shared. This again is an area where the commission has a critical role because, with the seismic research that it has done in Canterbury and elsewhere, it has a much better understanding of risk, how buildings can be modified and better built to protect against seismic hazard. This research function of the commission is quite critical, and that’s also dealt with in the bill in making sure that the commission is adequately resourced to do that.

So there is a lot of work that the Department of Internal Affairs is pulling together around a multi-agency community resilience programme in the face of the disasters that we’ve seen on Tairāwhiti, on the East Coast, in Westport, and increased stormwater flooding in Auckland. It’s about how, as a country, we have the key conversations about policy issues like managed retreat and how, as a wider community, we ensure that people can survive those disasters. We deal with the stress of people having to repeatedly worry whenever heavy rain is occurring. What will happen to their homes? What will happen to their communities? The huge social and economic disruption and dislocation that occurs with those disasters. So that’s a bigger conversation, but the Green Party is very pleased to support this bill and looks forward to it being considered by the Finance and Expenditure Committee.

Thank you, Mr Speaker. We’re approaching this bill with cautious optimism. The evolution of the Earthquake Commission (EQC) and how it operates and how people make claims and what it covers has evolved over quite some time, but I think there is a general consensus that something does need to change, that it needs to continue evolving. As we discovered with the Canterbury earthquakes, the system just wasn’t up to scratch and couldn’t function well under great pressure. That, as we all know, resulted in great pain and frustration and a lot of lessons learnt.

Now, as others have said, legislative changes like this, in this area, notwithstanding amendments, don’t happen very often, so there’s a bit of a feeling out there that it could be a once-in-a-generation opportunity we’ve got here. That might be a bit dramatic, but it does have to be done right.

Now, there is a fair amount of confusion out there when speaking to stakeholders and getting information, and what I’m hearing here in the House tonight as well, in terms of cover and range and exactly what we’re getting into. It would have been very helpful, I think, for the sector to have had an exposure draft and actually had a bit of upfront consultation here, because we absolutely do need to get this right.

So I’m hopeful that this bill is the right way to go about it and that there is a thorough process, which means a full select committee. They need to spend a fair amount of time getting stuck into this, listening to the sector and those who have experience in dealing with this system. Again, I stress the importance of this, because stakeholders, insurance companies—they did not get an exposure draft, as I noted. They are still reacting to it. The bill is considerably larger than the one it is replacing in terms of pages and clauses, and it’s pretty technical.

Some of the initial feedback I’ve received is there’s questions about raising the cap to $300,000, which is locked into this bill, and there are concerns about how much risk the Government wishes to take on, and therefore away from the private sector, despite their confidence in actually being able to insure and their ability to do so. There are questions about the financial settings over time—the cap itself and the levy. It seems logical that it will increase, but some more certainty around that would be helpful. The overall feeling, the overall direction of this bill out there, is positive but it’s cautious. Again, I stress that a lot of that could have been solved by a bit more communication with the sector previously.

As others have noted, the name of the commission, including “Natural Hazards Commission”, runs the risk of causing a bit of uncertainty about what exactly is covered and to what degree. There’s certainly been some different commentary out there, so we need to absolutely make sure we unpack that in the select committee. One could argue it’s just semantics and operationally it will be fine, but I’m very keen to hear that discussion. I agree there is probably justification for a name change. The EQC brand has taken a bit of a beating over the years, so it’s understandable there’s a wish to move on.

Those covered by this need confidence that the fund itself has solid oversight and cannot be tapped into inappropriately, and that running costs do not get out of hand given they rely on that fund. Overall change is needed because there has been too much inefficiency and too much heartache, but we should always be mindful that there needs to be sufficient or substantial justification for Government intervention in a market, and when there is, for the State to not get carried away, because when it does that, that is when unintended consequences come along—or very foreseeable ones, in many cases—and we have to come back here and fix things.

That’s why the select committee is so important and the Government should give this bill its full hearing that it deserves and not rush the process like it has for pretty much everything else. So, with that, we commend this bill to the select committee. Thank you.

Thank you, Mr Speaker. It’s a pleasure to speak in support of this bill, and I will be part of the select committee that gets to hear the submitters. I recognise that that will probably be a very interesting but quite emotional experience because we’re, no doubt, going to hear from some of the people who were really hurt by the previous iteration of this legislation—the culture that surrounded it—those people, particularly, of Christchurch who suffered in the earthquakes of 2010 and 2011. I have a great respect for Silvia Cartwright; she is one of the most interesting people I’ve had to meet, because she’s a very independent person and she has great structure in her thinking, and she brought us an inquiry and a report with a lot of detail in it, and a lot of lessons to be learnt. And, while those lessons have begun to be learnt and have been adopted, this bill will actually clarify and crystallise a lot of them in the law. So I welcome it coming.

I wanted to comment on a few things I’ve heard from the other speakers, just to clarify them. I went through the legislation that we have, and it is quite right that there is a concern about the cap being $300,000, but actually that’s subject to a review, so, according to the draft, that would be looked at every five years, as would the levies. My friend in the Green Party has talked about the process that would be adopted in that area, and I can see quite a lot of resonance, in what I’ve read so far, that goes to the methods that are used in accident compensation. So that happens both in that area, and it looks like the proposal is that we adopt quite similar ways of handling claims, and there’s a lot to be learnt in those areas, because what we’re dealing with here is actually a piece of legislation that’s a key part of our safety net in this country. It really is going to provide an underpinning security to not only people but also business in our country, because we all rely on being able to actually know where we stand in terms of this very important asset in people’s lives, which is their home.

I also wanted to comment on another issue that was raised, about whether in fact it was progressive enough in a time of climate change, in terms of movement of people from hazardous areas. I noticed, also, a provision which was about relocation of homes, and allowed for equivalent relocation—either on the land itself or on another piece of land. That seems to me a very sensible part of the legislation, so there’s obviously a looking forward to a time when there are going to be much greater challenges than we have had. After all, we do live in a country that is—I noted when I was looking through the material—the second-most dangerous country in the world apparently, in terms of natural hazards; so add to that climate change, and this is one we have to get right. I fully intend to work hard, alongside my colleagues, in terms of listening to submissions and listening to the lessons learnt, and making sure that we do get that right.

I think another important part of the bill, with regard to that, is that it does focus on three subsidiary purposes, and the third of those is actually education, research, and information. So it’s a bill that’s looking towards the future in that way, and it’s very much trying to build the resilience of our culture in these situations. The other subsidiary purposes of this legislation that are being introduced in this piece of legislation are claims management and fund management. With regards to claims management, I think that’s worth a pause, because I think that’s a lot of where the heartbreak came in the Christchurch earthquakes. We have to get that right. We have to have a system where people can actually engage in a process that doesn’t go on and on, and doesn’t try and actually break their spirit in order to break the cost of a repair.

This is a piece of legislation that I can see has so much to offer in terms of clarity, of people knowing where they stand, but also a process where they might be able to resolve their dispute, where they know where they stand, and where there’s a code of conduct that’s not all about driving people down, and is actually accessible to people—hopefully, without lawyers. I belong to that lovely profession and, actually, a lot of money was made by lawyers in the Christchurch earthquakes at the expense of a lot of people’s agony. So that is an area where I’d like to see a lot less involvement of lawyers and a lot more proactive, good faith resolution of claims at the earliest possible stage, and I can see that this bill has that potential. With that, I will finish and will say I’m looking forward to the learnings that will come out of this for me personally, and I commend this bill to the House.

I was one of the hundreds of thousands of Cantabrians who hid under the dining table on 22 February 2011, and I really did think my number was up. Then, of course, five years later I was hiding under the doorway in my flat in Wellington, and I really thought, “I’m not going to get away with this a second time.” But luck thus far has been on my side.

The disruption and the destruction and the distress that was caused on both of those occasions has been long felt and continues to affect the Canterbury region in particular to this day. What the earthquakes, I think, highlighted in part was firstly the ability of New Zealanders, and Cantabrians especially, to pull together but it also brought to the surface a number of shortcomings in the way that the Earthquake Commission (EQC) was able to respond to major events like those quakes.

Those shortcomings have been well traversed in Dame Silvia Cartwright’s public inquiry into the Earthquake Commission, which the National Government set up in 2011. It was clear following the Canterbury and Kaikōura events, as well, I think, as the floods and the scrub fires we’ve seen in the past 10 years, that natural disasters are very much part and parcel of life in the “Shaky Isles”, and as a result the functionality and range of EQC’s reach does need to be clearly defined and managed. I would agree with the member from the Greens Eugenie Sage, who spoke earlier and said that the range of events like this likely to hit our nation needs to be canvassed widely. This is our opportunity as a Parliament to take a good hard look, and we can do it once, we can do it right, and, yes, with a view to revisit these things every five years.

The bill seeks to deal with, among other things, the key issues and recommendations outlined by Dame Silvia. The National Party supports aligning the cover under the bill with that of standard private insurance practice, and if it means that the commission and insurance firms are all working from the same playbook, then that, I have to say, is a very good thing. It is so important to reduce the opportunity for dispute between the different interpretations of the bill, because we have seen that go on and on and on for 11 years in Christchurch particularly. And, because insurers are going to be acting as agents for EQC, it is critical that these two sides, so to speak, are not operating to different standards.

We would also support improving the consistency between the rules used to determine if a building is mixed-use, and the resulting cover of that building. We’ve seen complex cases involving bodies corporate still running through the courts today. If you ask any resident in Christchurch, I am sure they would agree that in the past there has been much difficulty trying to determine whether EQC cover is available and, if so, what the homeowner is entitled to. I personally have reopened a case 11 years after the fact; after I was given a $200 settlement to pull down and rebuild an entire brick wall. This bill will, hopefully, clear up things like that.

There are some common-sense changes, like extending the damage period of volcanic activity—we joke about it a little but we have seen it occur with devastating consequences in this country—and I am particularly pleased to see that, given the amount of advocates who have emerged since 2011 purporting to act on behalf of claimants but actually pocketing often sizable commissions. There are some aspects of the bill which would require more clarification and review at the select committee, and we look forward to supporting this bill as it progresses though its stages in the House.

Thank you, Madam Speaker. I must say, as a member of the Finance and Expenditure Committee, where a lot of the work we do is in the tax legislative space, which is of course excellent and full-on work, I am however very pleased to learn that our chair, Duncan Webb, has lobbied hard to make sure that this bill is coming to us. It’s going to attract incredible interest from right across New Zealand because it impacts on every one of us. It will create good, robust policy, which I’m looking forward to.

Every one of us lives in New Zealand knowing that a major earthquake can strike at any time. As the member for Tukituki living in Hawke’s Bay, the memory of the 1931, 7.8 earthquake lives on, where we remember every year the 26 people who tragically lost their lives, along with the thousands who were hospitalised. But then, through the art deco architecture, where a city was destroyed to rubble it was able to be rebuilt. I find it incredible that 111 new buildings were constructed in the downtown area between 1931 and 1933, in just two years, and yet we’ve heard tonight from the struggles of people in Canterbury and the unfair challenges they faced in trying to get paid out so that they could just get on with rebuilding their homes and lives.

In Hawke’s Bay, we’ve also witnessed just last year a one-in-200-year flood, which left flood-prone, low-lying areas covered, sections of housing in metres high of mud, as well as those suffering from slips on Napier Hill. It was a massive dark cloud that literally poured down on a very isolated area, reminding us once again that at any time mother Nature is an incredibly strong force, leaving destruction in her wake, and now no more closer to home than in the past week, where again parts of our region from across the East Coast have been left a sodden, washed-out mess.

We all know the cost of insurance is going up, but we need to make sure that we all help in making sure that there is security in knowing that people will be paid out in a timely and fair manner. As we see storms and cyclones coming at us faster year on year, we also know that New Zealand has the world’s second-highest natural disaster costs in the world as a proportion of GDP. Our natural hazards insurance scheme supports us to have one of the world’s highest rates of residential property insurance, so it is extremely timely that this Natural Hazards Insurance Bill enters its first reading. It will modernise the Earthquake Commission Act 1993 and its associated natural hazards insurance scheme and governing Crown entity, the Earthquake Commission.

The bill makes the following key changes. It makes rules for mixed and multi-purpose buildings clearer; clarifies regulations relating to repairing buildings and land following a landslip or other land damage; simplifies the excessive calculations for retaining walls, bridges, and culverts; introduces a claimant code and a standing dispute resolution service; and changes the name to the National Hazards Commission to reflect the broad range of hazards covered by the Act and dealt with by the commission.

I am looking forward to working on this bill, one that I believe many, many New Zealanders right across the country—

Order! Order! The member’s time has expired. Can I remind the member that, while she is coming in from a remote source, speeches are not to be read in this House. The member’s been around for long enough to be able to speak from notes.

Thank you, Madam Speaker. The Christchurch earthquakes touched everyone in New Zealand, I think. On 22 February 2011, Dr Dominic Bell, father of three, 45-year-old, larger-than-life character, who happened to be my brother’s best man at his wedding, went into the CTV Building, to his surgery there, and never came out alive. A few years later, I was shooting a documentary in Christchurch and I was just noticing the devastation at the red zone, and the higgledy-piggledy roads, the paint on the roads that still went everywhere, and to me they were a visual metaphor of how people’s lives had changed and become higgledy-piggledy.

Certainly, after that second earthquake, I knew a couple of sisters who were very close. They wanted to get out of Christchurch. They threw a dart, and they moved to the city where the dart landed. They had a little boy with them, who stayed at the noho marae with my children. A happy little boy during the day; at night time, we could hearing him crying, thinking another earthquake would strike. He actually went on to become a very good scholar and athlete. He was resilient, but others weren’t so lucky, and, really, that trauma was incredible.

On top of the trauma of the quakes came the trauma of the insurance claims. We’ve heard various numbers in this House—half a million; I think 700,000 was mentioned by the Hon Gerry Brownlee last night; I’ve seen between those numbers in media—and it just shows, actually, the complexity that the earthquakes caused, which speaks to what this bill is trying to help to resolve.

And then, of course, after that came the royal commission and Dame Silvia Cartwright’s work. Amongst the almost 1,000 submissions, there were some positive submissions from people who were deemed vulnerable; they got their claims dealt with quickly and they were lucky. But there were many, many others, as we’ve heard, who spoke of the lack of operating procedures; poor communication; the repeating of details of their case over and over to different people, which was re-traumatising; and the delays in getting things resolved. One person in their submission said, “The earthquake didn’t break me. EQC almost did”.

So there were high stress levels, reports of suicidal feelings, and post-traumatic stress—the effects of living in quake-damaged homes for months, or, as we’ve heard from Nicola Grigg, even for years, and ongoing injuries that happened. There was one claimant who said that they had experienced asthma for the first time in their life by living in a damaged home; another one who sustained a serious injury from slipping on cracked floor slabs.

The inquiry heard about the pressure on assessments, of quantity over quality, that assessors sometimes had to assess up to five dwellings per day, and people admitting that they had spent hundreds of thousands of dollars on lawyers and sometimes given up trying to get the claims that they were entitled to, because they had given up the battle with the Earthquake Commission (EQC).

So what this bill does is it tries to change all of that, and, really, this is about changing the culture of claimants, and putting claimants back at the centre rather than the process, which was so damaging to so many people. It simplifies and clarifies the Earthquake Commission Act. And, as we’ve heard, it incorporates many of the recommendations that Dame Silvia Cartwright made.

There are three main streams of work: it’s the claims management; the fund management; and the education, research, and information that goes with that process, and also keeping that up to date as things move on as the country experiences climate change and the different types of disaster and the different challenges that they present.

We can see a significant change in the title. EQC has become Toka Tū Ake—or the Natural Hazards Commission. So it covers not just earthquakes now but volcanoes, tsunamis, landslips, geothermal events, also fire as a result of any of these, and land damage caused by flood or storms. We’ve heard some discussion tonight about the need to have more thinking done around flooding in particular, and I’m very interested in this as the MP for Taieri, having seen people in my electorate traumatised by the floods of 2015. So I look forward to a public conversation where we can look at climate change adaptation and social insurance for flooding as we move into the new climate-adaptive future.

What the bill does is it has clarified mixed and multi-use buildings; it clarifies the regulations around landslips—it simplifies calculation, the excesses and certain structures around that—and, very importantly, it introduces a standing dispute resolution service.

I’d like to just focus on the claims management, because what it does do is codify the commission’s participation in a code of conduct and dispute resolution process, which is something that was clearly needed after the Christchurch quakes. It codifies a process for independent reviews of unresolved complaints. And it also extends delegation of claims to private insurers, and that’s about speeding up the process for claimants, because, as Nicola Grigg has said, 11 years on there are still people churning through the system.

So I’d like to commend Minister David Clark, who comes from the best part of the country—Dunedin and South Otago; just a little Facebook joke we’ve got going on—for his work on bringing the Cartwright recommendations to life.

This bill, it won’t bring Dr Dominic Bell back to life and it won’t bring back lost time or undo the stress for those who had to deal with the EQC after the Christchurch quakes, but I do hope that it brings reassurance to them that others won’t experience the same thing. Therefore, I look forward to hearing the submissions at the Finance and Expenditure Committee, and I strongly commend the bill to the House.

Thank you, Madam Speaker, for the opportunity to take a call on the Natural Hazards Insurance Bill. I just want to acknowledge all of the people who’ve spoken before me, particularly those who have a far more personal connection to the issues behind this piece of legislation, and particularly colleagues who are from the Canterbury region who have been at the forefront of some of these issues in New Zealand over recent years.

I think this is an incredibly important piece of legislation to many New Zealanders, and I’m pleased that the National Party is supporting this piece of legislation, because it is critical that after such significant events, such as what did take place during the Christchurch earthquakes, the impact of it is assessed and the systems and processes and the insurances which New Zealanders have in place and the Government has in place are assessed to ensure that that is all happening and all taking place in a way which actually means that New Zealanders are looked after through that process.

I do just want to acknowledge the report done by Dame Silvia Cartwright and the 70 recommendations, which have helped to feed into this particular piece of legislation, and the work that has been done to ensure that the voices of New Zealanders who did have to go through incredibly challenging and difficult processes following the earthquakes to be able to be heard—to be able to get their claims assessed and to be able to ensure that they could get on with their lives following those incredibly serious events with their homes damaged, lives disrupted, and then being able to, effectively, rebuild or have their homes fixed and being able to navigate that system. All of these things are things that we don’t hope anyone has to go through. These are not the types of situations we wish upon people, but, unfortunately, this is part of living in a country which has many natural disasters and which has many risks that we have to manage and we have to deal with.

This piece of legislation makes a number of very important changes, not only updating the legislation, the name of the earthquake agency to the natural hazards entity, but also about ensuring that it has a wider scope over the types of activity or natural events which take place and which it is able to respond to, about ensuring that there are improved systems and processes for New Zealanders, as they go through this process, to be able to make their claims, have those claims assessed, and for them to be, effectively, put more towards the centre of that process.

I note that a large part of this legislation deals with how complaints are managed, about having a code of insured persons’ rights, and having complaint procedures and then dispute resolution to ensure that those processes are managed in a timely manner. But there will be a number of areas which I think will be of interest to the committee. I won’t be on that particular committee. I’m sure the Finance and Expenditure Committee will be—

💬 Andrew Bayly: The august body!

—doing a lot of work. What was that, Mr Andrew Bayly?

💬 Andrew Bayly: August.

August body. They’ll be doing some great work. And, in terms of looking into the issues, I think a number of these issues have already been traversed in the debate. But, in terms of the issues of multi-level buildings, bodies corporate, and how that is managed, I think, as we see more intensification in our cities, more multi-level buildings being built, more New Zealanders are choosing to live in these types of buildings, that that becomes a bigger issue in a number of areas. And, obviously, it’s not just this bill which is addressing that issue, but the unit titles reform legislation, which is making changes there as well. It is an important issue for many New Zealanders to ensure their rights and that they also have their property rights protected if, in the case of a natural hazard, they’re requiring some form of assessment and pay out—and how that is managed to ensure that they have their rights protected.

So the final point I’d make is around the $300,000 limit, which has been increased. I’m pleased that there are review mechanisms, but I understand that is every five years. The point has been made, I think yesterday, by my colleague the Hon Gerry Brownlee, around the rapidly increasing costs in building materials and other issues to do with the cost of building. That is something which needs to be, I think, considered in more detail by the committee, because these are real issues facing New Zealanders, and what the adequate amount will be—and then, of course, what that means in terms of the impact it has on people’s levies. There will be some parts of the country which will have improved levies; there will be other parts which will go backwards. Having a good understanding about how those costs are shared across New Zealand, I think, is something which needs to be looked at in detail to ensure that that fair balance is being struck.

So, Madam Speaker, thank you for the opportunity to speak on this bill, and I commend it to the House.

Thank you, Madam Speaker. Good to be able to take a call on the Natural Hazards Insurance Bill and to support it through the first reading. There are two certain things, they say, in life—that’s death and taxes. I believe insurance is actually not far off it. If you look at history, there are records going back to 4,000, 3,000 BCE of insurance—of merchants going off to sea and the goods that are on board those ships being insured from land.

Before I went into the scintillating area of tax and tax law, I was a claims assessor for a fire and general insurance firm, and I was also a private medical and travel insurer claims assessor. So I’ve had a little bit of history in the insurance industry. Anybody that’s worked in the claims industry for the insurance industry, you know that Monday mornings are always going to be difficult if it’s been a wet and rainy weekend. I can recall very clearly being able to advise on particular claims on Monday mornings, when all you see are people on the phones—your claims adjustors and claims advisers on the phone—and you see them put their hands up, which is basically when a claims assessor and negotiator has to go on to the call and be able to work through a contract with people on the spot.

There’s no surprises that New Zealand does have a high insurance rate. Again, many speakers in the House tonight have gone through why we do, and that’s obviously for a lot of the natural hazards that we’ve had. One of the areas that is always difficult when you are assessing claims is when you come to areas of what we call total losses. Total losses is where an insured has, for whatever reason—whether it be due to a car accident or due to a fire; sometimes due to floods—absolutely lost everything for that insured property. It’s not just around the actual physical loss of that house or that physical loss of whatever that property is; it comes with a big package of emotions. Most people here have some sort of sentimental connection to whatever the property is that they have or that they own. Particularly for New Zealand, you can’t get a mortgage without insurance, so one of the biggest items that you’re going to have in your entire life will be your house. It needs to be insured. If you go through the process of a total loss, there are a lot of emotions that come with it.

I was not in the insurance industry in 2011, during the Canterbury earthquakes. I was in the tax industry at that time. But I remember, when those earthquakes happened, I thought of my former colleagues, and I thought of the stress that they would have to handle, and to be able to support people that would come to them with insurance issues at that time. That’s why it’s really important for this bill that the Earthquake Commission—that a lot of the lessons that were learnt from those earthquakes have been brought forward through this bill.

One of the areas that I’m going to be really interested in looking at and scrutinising, as well as when we get submissions from the industry and from insured people themselves, is clauses 55 to 83 in the bill, and those are the clauses in relation to assessing, deciding, and settling claims. For example, in clause 55, it requires the commission to decide whether a claim is valid and, if it is, to assess, decide how to settle it, and then settle the claim. This is a really good improvement on the previous policy, because actually what it means is that the commission can now actually make a decision. Previously, it was really difficult to. You’d need to go to court for it. What is also really good to see in this bill is that there’s going to be some dispute resolution. Clause 58—again, whether the claim is valid is a really important question which now the commission will have the authority to be able to decide on.

So I’m really looking forward to being able to sit down with submitters to see what they say—whether the draft legislation meets the intention that is set out in the explanatory note of this bill. There’s not much more that I want to say on this bill, because actually I’m looking forward to it coming through to the Finance and Expenditure Committee. I’m looking forward to being able to see where we can improve this bill, and I’d like to commend this bill to the House.

Motion agreed to.

Bill read a first time.

The question is, That the Natural Hazards Insurance Bill be considered by the Finance and Expenditure Committee.

Motion agreed to.

Bill referred to the Finance and Expenditure Committee.