Canterbury Earthquakes Insurance Tribunal Bill

It’s a great privilege to speak on the third reading of the Canterbury Earthquakes Insurance Tribunal Bill. As a member of the Governance and Administration Committee, which heard submissions on this, it was saddening in some ways to hear of the seven years’ experience of the people of Christchurch who have been through a really hard and long time in resolving some of the insurance issues as a result of the earthquake in Christchurch. So it’s really great to see a bill that is progressive, that gives people choice, that prevents so much litigation, and enables a cost-effective way for Cantabrians to get on with their lives.

It’s good to see that this bill establishes a tribunal that is especially for the purpose of mediation and a way of resolving issues in a non-litigious and less expensive way of going forward. I think it’s interesting that this great piece of legislation comes on the eve of the Wellbeing Budget, because while financial issues are important for Cantabrians, one of the most underpinning issues is the wellbeing of people who have gone for years and years with uncertainty as a result of some of the insurance issues brought about by the Christchurch earthquake.

I was in Christchurch only about two weeks ago as a member of the Labour caucus committee that took a visit to the very newly developed justice precinct in the heart of Christchurch. It had been a good few months since I’d been back to Christchurch, and I was really heartened to see the centre being rebuilt so well, to see such a high-quality justice precinct fully operational—

💬 SPEAKER: Order! It’s quite a narrow bill and, frankly, as there’s not a lot to say, there’s not a need to take the full time.

Thank you, Mr Speaker. I’ll get on to the point. What I was going to say was that it’s good to see that a bill like this enables the wellbeing of Cantabrians to proceed, and I’m heartened to see that there is so much good rebuilding, and I see this bill as part of that rebuilding, to enable people to get on with their lives and to be able to do that. That’s part of what this good Government is delivering, for not just Cantabrians but, in fact, for New Zealanders as well.

So what does this bill do? The tribunal will be a real circuit-breaker in terms of residential insurance claims, and it enables those policyholders to have choice, not just being faced with the Earthquake Commission (EQC) but having the ability to choose and go forward and progress their issues through this specially established tribunal. The tribunal will be homeowner orientated and that’s important. It means that policyholders, not EQC, are able to apply to the tribunal, so the disputes resolution process is fully operable for those issues that have been taking far too long for people to resolve.

The tribunal will be a specialist disputes tribunal resolution body, and it will have a specifically defined jurisdiction. In fact, the jurisdiction of the tribunal will relate specifically to the Canterbury earthquakes of 2010 and 2011. It will relate to the damage or the physical loss to residential and/or property and it will be between the policyholder and the insurer or EQC. So the tribunal will provide a flexible, speedy, and cost-effective process for those people who wish to proceed down this route.

There’s no fee for the tribunal, and that’s important. There’s no cost barrier to stop people from applying to this avenue. There’ll be no application fee to access the tribunal, to enter mediation, or for any expert advisers to be able to be appointed. Furthermore, the bill does provide a regulation-making power that would allow for Cabinet to introduce fees in the future if that is desired. So that is reserved there.

When we heard submissions at the select committee, it was really important to note, and as this bill has proceeded, that it is about time that those people that have waited far too long for a resolution of these issues are able to rebuild their lives—and just as Christchurch is being rebuilt, so are so many people who are unable to resolve these claims and get on. I’m proud to be part of a Government that prioritises this by establishing a special tribunal, enabling a cost-effective, non-litigious, and easily accessible way for Cantabrians to get on and resolve these longstanding issues. I won’t delay any longer. I commend this bill to the House.

I rise to speak on the Canterbury Earthquakes Insurance Tribunal Bill. The purpose of the bill is, and I quote, “to provide fair, speedy, flexible, and cost-effective services” to help resolve claims between policy makers, insurers, and the Earthquake Commission.

Well, in principle, National supports the effort to have alternative measures to resolve outstanding claims, and also we believe that we need to get rid of the backlog of claims. That intention is, of course, perfectly acceptable, but the problem is that we have always had these concerns or reservations about whether this bill will be able to achieve what it intends to achieve. So I’m very disappointed that the other side voted down some Supplementary Order Papers (SOPs) proposed by our colleague Stuart Smith. Now, he proposed a few SOPs and most of those SOPs are very good, but they were not able to be passed in this House, because the other side did not accept them.

So let’s go through some points of these SOPs. First of all, SOP 226—right? This SOP acknowledged the need for a fair and speedy resolution of claims while maintaining procedural fairness. Well, this SOP would have removed any doubt that this tribunal will restrict the ability of parties to call or cross-examine expert evidence. So this SOP would achieve that, because at this moment we are still doubtful that that expert evidence would be called by all parties and would be cross-examined.

The bill is trying to resolve some backlogs, some very complicated and technical claims, because these claims—2,233 outstanding claims—are very complicated. Most of them are very complicated and technical. It is therefore important for us to have expert evidence. At the same time, you also need to test that expert evidence, because we need to make sure the evidence itself is really well founded. We need to be able to cross-examine the expert evidence. That is why it is important for us to make sure these parties can call and also cross-examine expert evidence.

Then there’s another one—another SOP. That’s SOP 229, which amends clause 55 to ensure that all members who are appointed hold a law degree, with a minimum seven years of practising experience, or are another suitably qualified professional with arbitration experience. Now, at this moment, there is a risk that members may lack experience and objectivity, because at the moment there are no requirements that the members must have something like a law degree or experience in practice in law, and also there is no requirement in there to make sure these members would be able to be impartial. So that’s why it is important for us to make sure these members do have that kind of—either a degree or certificate or qualification or experience. So this SOP would, again, make sure that the tribunal would be very credible, but, again, it was not accepted by the other side.

Another issue is who can bring claims to the tribunal. At the moment, only policy makers can bring claims to the tribunal, but in some cases it is not really insurers who cause delays. It could be policy makers who cause delays, because policy makers may want to get the best deal out of this particular dispute. It is important to have what we call natural justice to make sure the insurers also can bring claims to the tribunal, so this is another point we would like to emphasise. But, again, it was not accepted.

It is important to note that we should give insurers some confidence in the market, because they contributed billions of dollars in settling the claims in Christchurch, and the credibility of these insurers, basically, is often underwritten by underwriters overseas. So it is important to make sure these insurers and also underwriters have confidence in the market and also have confidence in our justice system.

Now, the final point is whether we should allow respondents to pursue claims with third parties after the settlement of claims. Basically, at the moment, once the policyholder’s claim is settled with the insurer, then the case is deemed to be finished and, therefore, for an insurer to bring any claim against a third party, the insurer would have to go through the High Court to start the process again. Again, we would say that that is not really a fair or a speedier or a more flexible or a cost-effective way, so that is why we believe this bill may not be able to achieve what it attempts to achieve.

To summarise, this bill has some problems and it could have been improved. But, unfortunately, the SOPs from this side were not accepted, and, therefore, we do not believe this bill will be able to achieve what it intends to achieve. Thanks.

Thank you, Mr Speaker. It’s a great pleasure to take what I think is the final call on this bill, as we’ve shepherded it through this Parliament, to give to those Canterbury homeowners who have waited so many years to get the resolution and the justice they have looked for for their insurance claims arising out of the earthquakes from September 2010.

It is disappointing that—as Dr Jian Yang, the member who’s just resumed his seat, has acknowledged—the National Party won’t support the bill, and it is disappointing that we have got to that point, given that, really, this is an issue that I think all members of this House know deals with the distress and the hurt that many policyholders in Christchurch have been feeling over those many years. I don’t doubt that most members in the National Party are keen to see a resolution of those disputes between those policyholders and the insurance companies. This bill provides a mechanism to ensure that that can happen without all the paraphernalia and litigiousness that goes with conventional litigation processes. That’s what this bill has sought to achieve, because that actually has been part of the stumbling block up to now. Policyholders have sought to make their claim, it’s been put in dispute, and that dispute has been dragged out with contention over engineering advice and expertise and what have you. Well, we’ve actually got to get to a point where the several hundred householders whose insurance issues are still in dispute can get to a point of conclusion so that they can move on with their lives. I think that this tribunal will be a circuit-breaker for those many hundreds of disputes that have been dragged on for so long and for people who, frankly, deserve closure.

Can I just deal with some of the issues that Dr Yang made in his address just now in terms of things that the National Party wanted to see in the bill but that are not there, because, in my view, the things that the policyholders need to resolve their disputes—that is all there in this bill as it is now. So in terms of procedural fairness and the ability to bring expert evidence, that is there, and, in fact, what the bill provides for is for the tribunal to have on hand its own expertise so that it can provide real objectivity, rather than one party or the other’s high-paid, favoured consultant of the day. The tribunal will have expertise available to it and on hand, and it will be the source of objective advice to the tribunal and to the parties appearing before it.

Then the complaint was “Well, there’s no opportunity for cross-examination.” That is not correct. The tribunal member—the adjudicator in the tribunal—will have the full power to test the evidence that gets put before it. Of course parties who are represented in the tribunal will have their questions and their issues, and some will put them directly to experts and other witnesses, but the tribunal member will have a duty to make sure that they understand the evidence and the evidence is clear and that the decision that they ultimately make is one based on evidence. The ultimate discipline on tribunal members making decisions is that their decisions are still subject to appeal, and any person acting in a judicial capacity in any of our low-level tribunals or our senior courts that are subject to appeal knows that that right of a party to take appeal is integral to the discipline they exercise when making their decision.

In terms of members being suitably qualified, I think we need to understand too that it is not just lawyers—and particularly those steeped in insurance law—who have wisdom to bring on disputes between policyholders and insurance companies in this issue. There are plenty of articulate engineers—yes, I’ll say that again; articulate engineers—who are quite capable of not only understanding the technical issues but articulating the respective issues that each party might have and to bring it to a resolution, as well as others who can bring their disciplined thinking to these issues. It doesn’t just have to be lawyers.

Then, finally, there is the issue of those who can bring claims. There is only one way an insurance policy falls into dispute, and that is after a policyholder has made a claim and an insurance company takes a different view. I have yet to see a case litigated where an insurance company is suing a policyholder to bring a claim against the company. That doesn’t happen—it’s not how insurance claims work. So it is totally logical that those who initiate action in this tribunal are the policyholders, because it is only once a policyholder initiates a claim that a dispute potentially arises. This tribunal will be set up to make sure that the policyholders—and they are the ones who are aggrieved and who are suffering the grief from a lack of resolution, in addition to what has happened to their homes, which is usually their largest asset—they are the ones for whom this tribunal will bring a resolution, as well as with the insurance company.

I might say too that the processes that this bill sets up for the tribunal to follow have been modelled on some of the alternative dispute resolution processes used for live insurance disputes in Christchurch in the last couple of years. It is about finding models of dispute resolution that actually work, that are respectful of all parties, and that get to the heart of the issues but that, ultimately, achieve a resolution that everybody is satisfied with and everybody can live with, and conventional litigation doesn’t always do that. Some would say it seldom ever does it. But in these cases, when someone’s home—the place where they have lived, where they have perhaps raised a family, the place that is their sanctuary—is severely damaged and is the subject of an insurance claim, that attracts a whole heap of other emotion and sensibility and sense about it, and this tribunal is about recognising the human factor that goes into these insurance claims with a view to bringing them to closure very quickly. This will be a specialist body with its specialist jurisdiction and it will operate in its specialist way in these very peculiar circumstances following the Christchurch earthquakes of 2010 and 2011.

As I’ve said, there will be a right of appeal. The final right of appeal will be to the High Court on matters of law only, and that is as it should be. If a tribunal member gets the legal principles wrong, let’s apply the legal principles, but let’s not strip those tribunal members of the opportunity to look for creative and ultimately acceptable solutions through good, creative engagement and creative thinking. These processes allow the parties to resort to either a mediation—a heavily facilitated mediation—or an arbitral process, like a conventional District Court judge, to bring these matters to a close. It gives flexibility and it would be a very human process and a very accommodating process that, I think, would give us a much better chance of bringing resolution and conclusion to these difficult claims. So I look forward to this tribunal getting under way and kicking off its work.

Can I just conclude by expressing my thanks to the members of the Governance and Administration Committee for their work on the bill and for their close examination of it, and to all members of the House for their contribution to it and their further examination of it. There are still many hundreds of claims that are yet to be properly resolved. This gives us a chance, this country a chance, and the people of Canterbury a chance to achieve some resolution, to put these difficult issues behind them, to bring peace and harmony to a city that has so desperately striven for it over many years—a city that is re-beautifying itself and looking amazing. I think this bill will go a long way to bringing that much-needed closure that so many in Canterbury have been looking for and now have a chance to receive. Thank you.