Natural Hazards Insurance Bill

Members, we come now to the Natural Hazards Insurance Bill. Members, we come now to Part 1.

I raise a point of order, Madam Chair. I seek leave for all provisions to be taken as one debate.

Is there any objection to the motion? No objections. We will take it as one debate. The question is that Part 1 to Part 6, Schedules 1 to 3, and clauses 1 and 2 stand part.

I am very pleased to open proceedings on the Natural Hazards Insurance Bill. Before taking questions on the bill, I’d like to make a few remarks about why the bill is needed. In response to the experience of homeowners during the Canterbury earthquakes and the Kaikōura earthquake in 2016, a public inquiry into the Earthquake Commission (EQC) was established. It was led by Dame Silvia Cartwright, and the inquiry made 70 recommendations. They identified legislative, operational, and systemic areas requiring improvement in the design and administration of the EQC scheme and event response and recovery. Many of the inquiry’s recommendations are being progressed through to connect key initiatives. One is, through this legislation, the modernisation of the EQC Act through the Natural Hazards Insurance Bill and, secondly, through fundamental changes to the commission’s operating model through the development of the natural disaster response model.

The changes in the bill draw on lessons learnt, essentially, since the inception of the EQC Act. It replaces the Act and has three overarching objectives: the first is to enable better community recovery from natural hazards; the second is to clarify the role of the commission and the cover provided by the bill; and the third is to enhance the durability flexibility inherent in the legislation. It’s a modernisation—if I can characterise it that way—of the EQC Act 1993 rather than a first-principles review. And that means it retains the current EQC insurance scheme. It changes the name of the Earthquake Commission to Toka Tū Ake—Natural Hazards Commission to better reflect the role of the commission, the job that it is tasked with doing.

I want to introduce six policy measures contained in the bill, which are aimed at clarity, and some of which address shortcomings in the existing Act. And really that goes to the issue I’ve raised about being a clarification of the existing Act and lessons learnt, as well as adopting those changes from Dame Silvia Cartwright.

The first is the provision of role clarity for the commission itself. It’s got a new purpose statement for the commission and for natural-hazard cover. The commission has also been provided with revised functions and new operational objectives that define the commission’s operating boundaries. The second key policy covered off in this new bill is the requiring of a code of insured persons’ rights. That’s something that will need to be published on Toka Tū Ake’s website and that has a complaints procedure set up, relating to it. The third policy area is the requiring of Toka Tū Ake to participate in an approved dispute resolution scheme. The fourth is clearer and fairer accountability for mixed-use buildings. The existing rules have been the subject of disputes along the way. That clarity makes it clearer and easier and extends the scheme as well to provide more equitable cover for residential owners who are in mixed-use buildings. The fifth area that’s covered off is the “clear and fair” cover for retaining walls, bridges, and culverts. And that makes clear the limits, the caps, that are covered by the Natural Hazards Commission for retaining walls. That’s a cap of $50,000 per dwelling for retaining walls and $25,000 per dwelling for bridges and culverts. That means that private insurers can be really clear about what the top-up cover they are providing is, because those limits are set much more clearly. And that enables people to make better decisions, basically. The sixth area, before I make some closing comments, is the provision of a regular review of funding for the scheme, including the insurance caps and levy. It confirms the $300,000 plus GST EQC cap, which regulations brought into effect in October this year already, but it confirms it in legislation.

And a Supplementary Order Paper (SOP) has also been lodged—which is the final thing I want to say before other members speak—which makes a number of minor and technical adjustments which were identified by officials during the select committee process but would not be able to be progressed in the time frame necessary. But it’s good to be transparent with the House about those changes, so members can read them for themselves. The SOP preserves the current practice, which is that claims for exacerbated damage which occur after an initial event—for example, a house cracking after it settles—are treated as part of the initial claim. That’s one of the things covered off in the SOP. It also allows exceptions to the shared-property provisions for related parties to be specified in regulations, and a number of other small changes I won’t speak to now.

I would invite comments from the committee. It’s good to see that there’s been general agreement around the bill, and I want to thank the Finance and Expenditure Committee for the constructive way that it engaged in this debate and refined the bill on the way through.

Thank you Madam Chair, and thank you, Minister. It is a good bill, the Natural Hazards Insurance Bill, and the National Party certainly supports it. One of the areas in which I had a concern—which you’ll be aware of, Minister—is that the insurance companies would get 18 months clear to introduce their new pricing and systems to comply with the new bill. My first question would be: will this be able to be achieved? So would we need the third reading by the end of the sitting year?

I thank the member for the question, which is a very good one. It is going to be the will of the House as to whether we get that far through. But I do want to thank members for allowing this to be taken as one debate, which I think will enhance greatly our chances of getting that through. I think all of us in this House do want as much time for the implementation of this scheme as possible, so that the adjustments to IT systems and other things—which is a concern I know the National Party raised in committee—can be taken account of as this legislation is progressed and then implemented. So it’s my sincere hope that it will get through this year, but, again, it will be the will of the House. And I want to thank members for their cooperation in at least setting up that possibility.

Members, I must report progress on this bill.

House resumed.

Madam Speaker, the committee has considered the Natural Hazards Insurance Bill and reports progress. I move, That the report be adopted.

Motion agreed to.

Report adopted.

The Natural Hazards Insurance Bill is set down for further consideration in committee next sitting day. Members, the House stands adjourned until 2 p.m. tomorrow.

The House adjourned at 9.57 p.m.