Katene Rahui: Insurance (Prudential Supervision) Bill — First Reading 
Katene Rahui: Insurance (Prudential Supervision) Bill — First Reading 
[Volume:659;Page:8321] 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 TheInsurance (Prudential Supervision) Bill starts off with honourable intentions. It promotes the maintenance of a sound and efficient insurance sector and public confidence in the insurance sector. It is a laudable goal to promote confidence among policyholders and the general public. 
As members of the Finance and Expenditure Committee we have heard more than our fair share of uncertainties and financial anxieties amongst stakeholders and the general public alike. I was interested therefore to learn that at the end of last year although all other variables of the market were heading downwards life insurers were sitting pretty with a 9.5 percent increase in total premiums. Statistics from the Investment Savings and Insurance Association showed that total premiums for life insurance policies for the year to 30 September increased to $1.512 billion. Apparently this was all to be expected as people looked “for the safety security and peace of mind that life insurance provides”. 
With this grand setting the bill introduces a major change to the insurance sector by clarifying and refining the legal accounting and actuarial responsibilities of the proposed regulatory environment. It is to be noted that this is indeed a major change as historically our insurance industry has been lightly regulated. Over the last few years there has been a desire to bring the insurance sector more into line with the regulatory focus of its international peers a desire that was given shape some 6 months ago when the Reserve Bank released the draft Insurance (Prudential Supervision) Bill for stakeholder consultation. 
The bill will establish a system for licensing insurers impose prudential requirements on insurers provide for the supervision by the Reserve Bank of compliance with those requirements and confer certain powers on the bank to act in respect of insurers in financial distress or other difficulties. In that respect it has been described as a relatively light-handed approach to regulation with the emphasis being placed on self-discipline. In effect compliance is largely self-administered although supervised by the Reserve Bank. We welcome the move towards establishing certainty while at the same time encouraging an improvement in general practice. 
The Maori Party has supported other bills to improve regulation of the financial sector including the Financial Advisers Bill the Financial Service Providers (Registration and Dispute Resolution) Bill and the Reserve Bank of New Zealand Amendment Bill. We are of course aware that the fact that this bill is even on the books indicates the failure of the market to regulate itself. The House can be assured of our general support for this bill to remove inconsistencies in application between different insurance sectors and to provide legislative regulation where no prudential regulation currently exists. We see this as a safety mechanism that is in the best interests of all those implicated in the insurance industry but I want to raise a few questions around this whole issue of insurance. We know that insurance can be a huge cost for Maori iwi and hapu who have responsibility for a marae or local gathering place. Legal risk and/or indemnity insurance costs may be a disincentive for Maori and better information about insurance may help to address this problem. I also recall a report from the Ministry of Women’s Affairs that suggested that most Maori women do not have private provision for health or sickness insurance. Although we support the intention of moving to a sound insurance sector we need to make sure these issues are aired as we consider the take-up of insurance and eligibility and access for Maori along with other New Zealanders. 
The Maori Party agrees that the financial stability of insurers is essential to provide the level of protection necessary for a sound insurance sector. We also all know the stories of constituents who have been ill-served and ill-informed by those in the insurance sector. Consumers must be well placed to monitor the financial strength of insurers both on their own and collectively. In the best interests of the people we will vote to support the bill at this first reading and we look forward to subsequent debate.