SpeechNATURAL HAZARDS INSURANCE BILLFirst ReadingHon Dr DAVID CLARK (Minister responsible for the Earthquake Commission): I present a legislative statement on the Natural Hazards Insurance Bill.ASSISTANT SPEAKER (Ian McKelvie): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr DAVID CLARK: I move That the Natural Hazards Insurance Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.New Zealand has the world's second-highest natural disaster costs in the world as a proportion of GDP. It's one of the reasons we're called the Shaky Isles". On the flip side our natural hazards insurance scheme supports us to have one of the world's highest rates of residential property insurance. For a multitude of reasons it's crucial New Zealanders can continue to get affordable insurance cover and their compensation paid when it's due as quickly as possible. Insurance is fundamental to helping communities recover after an event. Compensating policy owners for the damage caused by a natural hazard means they can repair their home and move on with their lives.After the Canterbury earthquakes this wasn't always the case. So we have taken the time to learn from the Canterbury experience to ensure no one needs to be traumatised again by the claims process. The Natural Hazards Insurance Bill builds on the important lessons we've learned during the past decade. It streamlines the current Earthquake Commission Act and incorporates many of the recommendations from Dame Silvia Cartwright's public inquiry into the Earthquake Commission (EQC). I want to at this point put on record my thanks to Dame Silvia for her very comprehensive report and well-considered recommendations which have provided a fantastic platform for futureproofing the scheme. Dame Silvia made 70 recommendations in her inquiry. I'm proud to say that 49 of these have been completed or are close to completion including 10 recommendations being completed by the passage of this bill itself.Two inquiry recommendations were to change the name of the Act and the scheme's administering organisation to recognise natural hazards insurance being not just about damage caused by earthquakes. The name "Natural Hazards Insurance Bill" acknowledges the scheme also covers damage caused by landslips volcanic eruptions hydrothermal activity and tsunami. Therefore I would also like to introduce the House to Toka Tū Ake - Natural Hazards Commission. The Earthquake Commission has changed significantly from the small 22-person organisation it was in September 2010. It has now evolved into a modern forward-looking and resilient organisation. The recommendations made by the public inquiry have been embraced by the staff none more so than identifying a name for itself to better reflect its role and place in New Zealand. Toka Tū Ake represents the foundation from which we stand strong and revive together.The people of Canterbury told the public inquiry of difficulties they had working with EQC. We don't want this to happen again; so the bill proposes a code of conduct defining the rights of claimants. The code will be published as part of the statement of performance expectations and claimants will be able to have their issues heard.The inquiry also recommended a dispute resolution service be available to claimants when they were unable to reach an agreement with Toka Tū Ake. The bill requires Toka Tū Ake to participate in dispute resolution as an alternative to the court action many Cantabrians felt forced to take. We don't want claimants feeling they need to pay to resolve issues they have. Many features of the current scheme are not changing such as cover being attached to private fire insurance policies. EQC will remain a Crown entity and the Crown will guarantee the scheme. Toka Tū Ake will continue to have a strong role in education in research and information regarding natural hazards.So what are we proposing to change in the bill? The bill introduces a range of measures to update the financial governance of the commission to reflect modern practice and to require at least a five-yearly review of the scheme's key financial and risk management settings. Many of those living in mixed- and multi-use buildings across Canterbury—and again in Wellington following the Kaikōura earthquake—had a difficult time resolving multiple insurance claims for damage in their building or complex. The bill proposes rules that are clearer and easier to determine the amount of compensation to be paid. Changes proposed will make it easier for people with retaining walls bridges and culverts to understand what compensation they could receive if these are damaged. There'll be caps of $50000 per dwelling for retaining walls and $25000 per dwelling for bridges and culverts. This allows people to purchase further cover if for example their property has considerable retaining walls.The bill clarifies regulations relating to repairing buildings and land following a landslip or other land damage. It also sets a date for the increased EQC cap of $300000 to come into effect. Increasing the EQC cap should lead to reduced premiums for many New Zealanders as the Crown absorbs liability and risk from private insurers. This change means the Government through EQC will formally take on a greater portion of risk although as the AMI example in Canterbury shows us the Crown is often on the hook either way. I'd expect to see insurers reflect reduced risk in their pricing for residential property insurance purchased by New Zealanders after October 2022.The bill proposes the Act come into force on the latter of 1 December 2023 or 12 months after Royal assent. And that ensures there is at least a 12-month gap between enactment and entry into force. The bill also provides for the Governor-General to be able to by Order in Council defer commencement.In closing I do want to acknowledge the work that's gone into this—particularly with officials at both the EQC and Treasury working together constructively agreeing many things disagreeing other things and seeking clarification from the responsible Minister. A huge amount of effort has gone into getting the technical detail right to looking at how claims have been settled customarily to ensure that the rules are clarified to the extent possible to ensure that the process can be as simple as possible for those who are trying to recover in the face of a significant natural event. I recommend the bill to the committee and look forward to them working on it and working through the detail to ensure that this scheme continues to work for New Zealanders in the future. It gives me great pleasure to commend the Natural Hazards Insurance Bill to the House."