Genter Julie Anne: Insurance (Prudential Supervision) Amendment Bill Reserve Bank of New Zealand Amendment Bill — Third ReadingsText is incorporated into the Bound VolumeGenter Julie Anne: Insurance (Prudential Supervision) Amendment Bill Reserve Bank of New Zealand Amendment Bill — Third Readings[Sitting date: 27 August 2013. Volume:693;Page:12815. Text is incorporated into the Bound Volume.]JULIE ANNE GENTER (Green):Tēnā koe. I rise to speak on the third and last reading of the legislation arising from the Insurance (Prudential Supervision) Amendment Bill. The Green Party has not supported these changes and it will not be supporting this amending legislation so I will take just a few minutes to explain why.The Insurance (Prudential Supervision) Amendment Bill makes nine technical changes to the principal legislation which is the Insurance (Prudential Supervision) Act 2010. That Act established a licensing and prudential supervision regime for insurers operating in New Zealand and the Green Party wholeheartedly supported that Act. There are technical changes proposed in this legislation—I can completely understand the reasons for some of them but for others we had questions that were not adequately answered during the select committee process. Therefore we decided that although we can understand that there is some need to ensure that during the transition period there is a smooth transition from provisional licences and there was a need for this particular amending legislation in order to extend the provisional licensing period we thought it was important to object to the changes on principle. In the wake of the global financial crisis and with the increasing severity and frequency of extreme weather events it is quite clear that all financial services but particularly insurance need to be moving in the direction of greater regulation and Government oversight rather than less.Although we hear a lot of rhetoric from this Government about cutting red tape and making things easier for businesses the fact is that we are not talking about New Zealand businesses. A lot of the particular changes in this legislation—one of which is allowing overseas insurers to use accounting rules that apply in their home country for interim financial reporting rather than adhering to New Zealand accounting practices—are not benefiting New Zealand business and they are not benefiting the New Zealand economy particularly either. We have seen a rationalisation of insurance providers in New Zealand to a few big overseas-owned players and ultimately the Green Party is very concerned about the risk that this poses to New Zealand.I understand that with the increased number of severe weather events around the world and problems like earthquakes here in New Zealand the insurance industry has been under some strain and we lost one of our own larger New Zealand - owned insurers AMI because it was not in as good financial health as it should have been. The problem is that if we do not have strict regulatory oversight then there is an incentive for organisations to cut corners and to cook the books a little bit in order to compete with other larger organisations that also do not have to comply with a strict regulatory regime.In other words if the Government is not there to set the rules of the game and to enforce those rules and make sure that organisations are doing what they are supposed to be doing then there is necessarily a race to the bottom because competitive pressures will result in organisations cutting corners and stretching the truth. We have seen so much of that in the past few years not just in the insurance industry but in the financial sector. There were how many dozen? I think it was something like 70 finance companies that went under.This is not a case for less regulation. What this has demonstrated to us is that these sorts of sectors financial services sectors actually need more strict Government oversight. I do not understand how these particular changes are going to facilitate and make it easier for New Zealand companies to start up and provide insurance here in New Zealand and provide greater choice to people in the market.In the past few years even with the large number of payouts and disastrous events that insurance companies have had to pay for we have actually seen record profits. Insurance companies have been making record profits.John Hayes: Good. They pay record tax.JULIE ANNE GENTER: Well yeah. The question is why should we be reducing compliance costs which are actually a necessary part of regulatory oversight at a time when it is actually New Zealand households and businesses that are going to be vulnerable if the Government does not do its job of being the watchdog in this sector?The Green Party will not be supporting the changes because we believe that there is an important role for Government to play in ensuring that the economy runs in an efficient way. The best way it can do that is actually by greater regulatory oversight of financial services and particularly of the insurance industry as that is an industry that has been dominated by a few big overseas players and it is essentially too big to fail. Thank you.