Webb DuncanNATURAL HAZARDS INSURANCE BILLFirst ReadingDebate resumed from 29 March.Dr DUNCAN WEBB (Labour—Christchurch Central): 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 $100000 and this will raise it to $300000. 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 $50000 and at $25000 for bridges. That also needs to be understood because $25000 won't pay for a significant bridge or even a small one in many cases and certainly $50000 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.