Williams Andrew: Insurance (Prudential Supervision) Amendment Bill — First ReadingText is incorporated into the Bound VolumeWilliams Andrew: Insurance (Prudential Supervision) Amendment Bill — First Reading[Sitting date: 08 May 2013. Volume:689;Page:9838. Text is incorporated into the Bound Volume.]ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the Insurance (Prudential Supervision) Amendment Bill. New Zealand First will be supporting it through to the select committee. We believe that it is a fundamental situation in New Zealand that we must have a good well-functioning insurance sector. It has been proven over recent years that unless we do New Zealand is at great risk. It is most important—I think all parties in this House would agree—that we must have a very sound well-functioning insurance sector and that includes our own Earthquake Commission measures as well. The insurance sector underpins the basics of our modern economy. If we do not have a sound insurance sector our whole economy could suffer as a result. The public must have confidence that this sector is sound and appropriate prudential supervision of the sector is an important regulatory function that this Parliament must ensure is done to the highest level.The Christchurch earthquake demonstrated the critical role of insurance and it highlighted some concerns as were illustrated in the situation with AMI. It would be so easy for situations like that to occur if there was not oversight by this Parliament and by the Government to ensure that the right safeguards were put in place in terms of the insurance sector. But it also revealed some aspects of the insurance sector that may not be working optimally for New Zealand. With so much of the insurance sector dominated by overseas companies it is essential that the regulatory framework is comprehensive and up to date and that it works well. New Zealand First appreciates the significance of the insurance sector that it operates well in New Zealand and that at the present time we do seem to have it well and truly in hand. That is not to say that things cannot fall through the cracks. This bill goes a long way towards tidying up areas of that.We have a few questions which when the bill goes to the Finance and Expenditure Committee I am sure will be answered such as about financial standards not being required of the insurance provider if it is in a run-off period. If the licensed insurer is described as being in a state of run-off and is not entering into new contracts for insurance the Reserve Bank will be satisfied that it does not therefore have to have a current financial strength rating. We sort of have some doubts about that and we would welcome the Minister of Finance and the Government explaining that a little bit further because we believe that the highest financial ratings should be required even at a time when an insurance company is running down in New Zealand. We would not want it to slip out the back door so to speak because its financial ratings were not held to the highest level throughout its activities in New Zealand.This is a little bit like the bill that we addressed prior to this one the Trustee (Public Trust) Amendment Bill. The Insurance (Prudential Supervision) Amendment Bill is very much an administrative bill. It is a technical bill. It tidies up areas through the Reserve Bank to make sure that our insurance industry in New Zealand has better governance and better oversight. New Zealand First will be supporting the bill through to the select committee.