Earthquake Commission Amendment Bill

Thank you, Madam Chair. I’ll start out by saying that the National Party will actually be supporting this bill—with one very fine Supplementary Order Paper to go with that as well, which will put this bill into shape and make it fit for purpose, which it isn’t at this stage.

First of all, in Part 1 is the collection of information, which is a major part of this bill, which is just to tidy up and make sure that the Earthquake Commission (EQC) is acting within the law and can collect information and share it so that the community gets a greater good out of that. That’s right and proper. The National Party is certainly in full support of that.

But clause 7 was one area that we did have quite a bit of concern about, which is extending the period that a claim can be made. It goes into replacement clause 7(2) to schedule 3, where “The notice under subclause (1)(a) must be given to the Commission—(a) not more than 3 months after the damage occurred (or any longer period prescribed by [the] regulations under [the] Act);”. So under (b)—that is, replacement subclause (2)(b)—“subject to subclause (2B), after the period set out in paragraph (a) has expired but not more than 2 years after … damage [had] occurred (or any longer period prescribed by the regulations [in] this Act).”, you can put a claim in. In fact, under regulation-making power, the commission can make it as long as they need to make it, however long that is.

The concern we had, and still have, is that, really, insurance companies have a set period where, if a house is abandoned or a property isn’t being lived in or visited for 60 days, and you haven’t notified your insurance company, some insurance companies put a significant excess in—one’s a $10,000 excess. Others just won’t cover you in the event of an insurance event. So it’s a sort of long-held tenet, if you like, that that would occur. The risk here with EQC is, of course, people might think they’ve got plenty of time to put in an insurance claim. How anyone could go two years without knowing that they had an insurance issue that they needed to deal with—an EQC issue—is beyond me.

But there is of course a caveat in new clause 7(2B) if notice is given after the time limit expiring: “the Commission may decline the claim if [the lapse of time] before the notice was given materially prejudices the Commission’s ability to assess the claim.” And that is the risk here: that delaying a claim makes it very difficult for the assessors to pin down what earthquake—if you get a complex sequence of events like we had in Christchurch, it’s quite difficult to ascertain which one it is. Is it one event; is it two events; is it three events? And that can have quite a significant difference to the amount of money that could be claimed by a claimant, and it also puts them in such a position that if there is damage over and above that, their insurance company might not cover that either. I can’t see how they would not know they’d had an insurance claim unless they were out of the country or completely incapacitated.

But to put some numbers around it, in the case of the Christchurch event, 99 percent of the earthquake claims were in within a year; in the Kaikōura event it was 99 percent within 3 months, and that was down to—which will be in the next part, so I won’t discuss it in too much detail now—the arrangement between insurance companies and EQC, where a claimant could put in a claim and not go through the very inefficient process of making two claims: a claim going through EQC, once it’s determined to be above the cap, then having to go to the back of the queue with the insurance company, which makes an already stressful situation much more so.

So the time limit is something that we had concerns about. In the end, we decided to support it anyway—we were in a generous mood. It is a bit sloppy. I think it’s got some real fish-hooks in it, and I think it’s incumbent upon EQC to get the message out there that you are putting yourself at great risk if you don’t put your claim in within the prescribed period of three months.

I’ll just take a very quick call here to answer the question that the member has raised there. He asked the question of how people can go two years without knowing they had lodged a claim. Well, I think this very much speaks to the genesis of this bill, and that is to the experience of the Canterbury earthquake sequence. I think anyone that has been doing constituency work in Christchurch over the last seven or eight years has had experience of people for whom a various number of circumstances mean that a claim was not lodged within the three-year period. I know that I’ve certainly had situations where there may have been the death of an elderly person, and it’s only when the family come to clean up the house and empty it out that, indeed, damage has been found.

As the member Stuart Smith identified, 99 percent of claims are filed within the statutory period under the old provision, but what we do know out of the extraordinary circumstances that we’ve been through in Canterbury is that we actually do have to have legislative flexibility around some of those extraordinary circumstances that do surface when there is an event such as we went through there. So this is very much—it’s not sloppiness in drafting, I’d like to assure the member. It is actually born of lived experience of people on the ground doing constituency work and understanding the needs of those that need to use those services.

I’m sure that is a feeling that is acknowledged across the House by members from any party in this House that have been working on the ground with that. So I hope that answers the member’s question about that, but I would like to thank the Opposition for their support for this bill.

Thank you, Madam Chair. It’s a pleasure to rise in this committee stage on the Earthquake Commission Amendment Bill. It is good to see—and the Minister’s already mentioned it—the cross-party collaboration, if you like. We’re all supporting this bill. It is a bill that had to come about—well, it’s been a number of years since the Christchurch earthquake, and I’d like to put it on record and thank the Earthquake Commission for all the work that they have done in those intervening years. It has not been easy for them, and, of course, it has not been easy over these years for the victims or for those who suffered damage to their houses and buildings and so forth during the earthquake. This bill makes some changes. In hindsight, you might say, “Well, should it have been done earlier?” But it is a very good bill in that we are here today supporting these changes.

A couple of questions I do have for the Minister: the threshold is being moved from $100,000 to $150,000. That hasn’t quite kept up with inflation, and I wonder why—

CHAIRPERSON (Poto Williams): That is—I think that’s in Part 2.

Oh, Part 2—OK.

CHAIRPERSON (Poto Williams): Yeah, we’re on the Part 1 debate.

I’ll leave that till Part 2.

CHAIRPERSON (Poto Williams): Thank you.

The next question I had was on the ability to go over the three-month period. It’s good that it is able to be—

💬 Hon Ruth Dyson: Which part’s that in?

—flexible—sorry?

💬 Hon Ruth Dyson: Which part’s that in—which clause is that?

Part 1. Part 1—that’s the time. The three months and the two years. I think the Chair has got the lead on this. So that is a good thing, because it enables people to claim after the old limit of three months. Also, the clarity around what is an event and what is not an event is not clear, as far as I can see, at least, and what happens when an earthquake happens today—claimable at four months—and then there’s another earthquake, another event, after that claim. Is there an ability to consecutively claim a number of claims?

It is good that there’s a lot of other legislation coming forward regarding earthquake management in towns, provinces, safe areas, and corridors. All that stuff is excellent, and that is stuff that we will support on this side of the Chamber.

Thank you, Madam Chair. It gives me a great deal of pleasure to take a call on Part 1 of the Earthquake Commission Amendment Bill. Having spent a lifetime, or half a lifetime—a lifetime for some in the House—in the insurance industry, I have a bit of an understanding of how insurance works. Unfortunately, it’s not the best thing always to have an understanding of, but, none the less, it’s interesting. This bill, of course, is a very important bill not only for, I guess, the reasons it’s been brought back to the House, which primarily relate to Christchurch and Kaikōura, but also for the fact that the Earthquake Commission really is a unique entity by world standards. It is hugely important for New Zealand because of the fragile nature of our ecology and the constant events we have.

So this part of the bill obviously enables the collection of information. One of the interesting things about insurance, of course, is establishing information, whether it’s legitimate or not, whether it fits with what’s going on or not, and whether it is actually relevant to the claim that’s being made. So I think that the way in which we gather information, the way we use that information, and the way that’s used for the resolution of claims and things like that is hugely important to it.

So the first part of the bill primarily deals with the regulations that permit the commission to accept notice given for the time limit applying, and that relates to the natural disaster that occurs. I think it would be really interesting for the Minister responsible for the Earthquake Commission to perhaps address the fact as to whether she considers this as a reasonable or appropriate way to deal with things.

So one of the challenges that we have with natural disasters, I suppose, is that they are never predictable, the results of them are never predictable, and the outcomes of those results are not predictable either. So it is very challenging, I think, for the Earthquake Commission, but particularly for the insurance industry in general, to match what the Earthquake Commission needs to deal with, to match the information that the insurance companies have, and where that then gets to with respect to the resolution of those claims.

Of course, the interesting thing that’s come out of the two major events—that the two earthquakes established—is that Christchurch for the Earthquake Commission was very testing, because they never anticipated, I don’t think, and were never set up in a manner that was able to deal with a disaster of that magnitude. They’d clearly dealt with a number of other disasters throughout the history of New Zealand but nothing of the magnitude of Christchurch. So the process that was gone through in the course of that event was, I guess, a learning experience for all and not necessarily dealt with particularly well.

The interesting thing about Kaikōura was when that came along and the insurance companies took a lead in the resolution of those claims, it changed completely the way those claims were answered, and I think that that’s a much better process. When you think about the resource that insurance companies have on the ground, they are automatically equipped to deal with the need for, I guess, very swift resolution to claims and also with the ability to be able to assess that sort of damage. So I think for them to take the lead in this process is eminently sensible and makes a much bigger difference to the experience of those people making a claim. So the provision of information between those two entities is very important, and the use of that, obviously, speeds those claims up, expedites what goes on, and enables it to happen in a much better manner.

So we’re certainly supporting this bill. I think that there were a number of resolutions or decisions made leading up to the formation of this bill, of which the Government have picked up about a half, I think, of the total number of recommendations made, but, none the less, I think the bill will progress through the House. I think it will be positive. I guess we can only hope that there’s no need for the use or for action from the Earthquake Commission in the near future, because the longer we go, of course, between these major events, the better off it is for New Zealand. We certainly don’t want to see too many of them.

Thank you. I stand to take a call on this very important piece of legislation. I digress just a little bit, because I was quite interested to hear at a meeting that I was at on Saturday for the opening of the Anzac fire service that it was the Ballantynes fire that caused restructure throughout how New Zealand dealt with fires. As I stand here, it was the Christchurch earthquake that actually helped to inform this piece of legislation, followed very closely behind with the Kaikōura earthquake. I too work in the East, along with your good self, Madam Chair, and with the issues that some of the constituents there have had over some of the Earthquake Commission (EQC) claims, I think that what the Finance and Expenditure Committee have done—I believe they’ve done a pretty good job at being able to kind of rally everything together into this bill.

I think that even though you heard nine submitters at the hearings around the collection and the disclosure of information in Part 1, there was one area that I was really pleased that the select committee looked into quite clearly because of the wording and through the Office of the Privacy Commissioner also recommending replacing clause 5 in the bill to insert new section 31A. So as I read through the select committee report of this bill, I was heartened to see that the select committee did take up the recommendations from the Privacy Commissioner, because it was closing a gap that would give out wrong signals or be misinterpreted by the claimants, and I think that the work that has been done to close that gap has been very good.

Then, as I move through extending the claim deadlines to two years under clause 7—“would extend the initial period of notice to allow claimants to give notice within 3 months of damage occurring. EQC could also accept claims [for] up to 2 years after damage [had] occurred”. As the Minister in the chair, Megan Woods, said in her contribution, some of the damage from the earthquakes and the aftershocks—people didn’t know until they went to do their house up to put it up for sale. You don’t know these things, and even where I stay in Burwood, there’s always these little things that have shown up, where I stay with Diane. She has said to me that as each earthquake and aftershock happened in 2011, there was a lot more damage underneath the surface of her house that she had no idea had happened. I also had visited a number of constituents where, whilst on top the window was a bit skew-whiff, underneath, the whole base of the house was virtually off its piles. So they felt that they were outside the time. They still have some issues that need to be addressed, and I think that this bill will give some sort of comfort to those that find these faults and need to put forward their claim.

I think EQC, considering the issue that they faced in the 2011 earthquakes and then the Kaikōura earthquakes, did an amazing job. I think that when you have these disasters, the Government agencies are then put to the test. So I think that EQC did very well, and I think this bill is quite timely to actually help them. And it wasn’t just about Christchurch; it’s for the future of the whole of New Zealand. We know that—

I apologise for interrupting the member. The time has come for me to leave the Chair.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Wednesday)