Smith StuartCANTERBURY EARTHQUAKES INSURANCE TRIBUNAL BILL In Committee Part 1 Purpose preliminary provisions eligibility bringing claims and case management STUART SMITH (National—Kaikōura): Thank you Madam Chair. Well it is a pleasure to stand and speak on the Canterbury Earthquakes Insurance Tribunal Bill. We have supported this bill through its stages to this point and I will be introducing four Supplementary Order Papers which our continued support very much depends on. While we all have great sympathy and empathy for those people who are still struggling to settle their insurance claims and recover from the Canterbury earthquake sequence there are principles of natural justice and also principles in law that we support and hold very dear and I think we take those principles for granted at our peril. My first Supplementary Order Paper (SOP) SOP 230 which seeks to prevent a one-way access to the justice system illustrates that point very well. As things stand the only entity that can bring a claim to the Canterbury Earthquakes Insurance Tribunal is an insured person and that's an important point. My SOP seeks to amend clause 5 making some changes but the main part is in clause 10 inserting new subclause (2A) which is An insurer may bring a claim to the tribunal against at least 1 person who is a policyholder or an insured person (or both) an insurer or the EQC by making an application under section 12 that is accepted by the chairperson under section 13." Now it might seem strange and I understand in principle why the Government elected and the Minister elected to do this but in fact there are legitimate reasons why the Earthquake Commission (EQC) or an insurance company may wish to introduce a claim into the tribunal. Sometimes claimants are reluctant to enter into a settlement process for their own reasons whatever they are—we shouldn't be judging that—but we must preserve the principles of justice. It is unprecedented in this context to have a one-way access to that—Dr Duncan Webb: The insurer can't sue a homeowner. STUART SMITH: —and I'm sure Dr Webb actually knows that very well. The actual legitimate reasons Dr Webb are there. We know they're there and I'm sure that that member knows they're there. In fact it's quite interesting and I'm really looking forward to the Minister in the chair Stuart Nash explaining why Cabinet agreed to this provision when in fact the Minister's own officials recommended that that not be the case. In fact they said quite clearly that there is a principle of natural justice and a legal principle by limiting an insurer's access to the tribunal. So I'd like to hear from the Minister why they arrived at that decision because it's an important principle and it's one that we stand on. As I said in part our support will be dependent on this SOP going through. We've got to also remember that insurance companies have contributed billions of dollars towards the repair of homes in Christchurch and those insurers rely on underwriters from offshore. Those underwriters put their capital at risk to underwrite insurance policies on the basis of the risk and those risks are not just limited to the natural risks that can cause damage to homes; it's also around the legal and the justice principles in the country in which they are investing their capital. We have just seen recently with what's been occurring here in Wellington with the change in insurance costs what could happen if the insurance industry loses confidence in this market. It's a very important point. I think it's been lightly treated by the Government and I'd like to know why. I'd like to know have they thought about that? Have they assessed that risk? All of the SOPs I'm going to introduce tonight have a similar process and principles in behind them. So it is a very important principle as I mentioned and I think that's very important. But I'm going to move now to my second SOP on Part 1 which is SOP 227 which allows insurance and the EQC to continue claims in the tribunal against third parties. Now this is quite an important principle in itself and it'll probably warrant some explanation. As the bill stands at the moment a claim is deemed to be finished in the tribunal when the insurer and the insured reach a resolution. Now there may well be third parties such as builders or engineers that could be third parties to that claim and they are disincentivised from actually reaching a resolution because they know the moment that the insurer and the insured reach an agreement and that's settled in the tribunal the whole claim falls away from them. They are no longer required to continue in the tribunal and that would require the insurer or EQC to pursue that claim through the High Court. Now we have a tribunal that is either there for justice and natural justice or it's not. It currently isn't without this SOP. If the tribunal is capable of reaching a resolution between the insured and the insurer it surely is capable of reaching a resolution with the third parties as well. All of the evidence will have been presented all of the cases will have been put all of the expert witnesses will have been called and the tribunal is then going to back away and say "No. Go and sort the rest of it out for yourself." The problem is that the people that will get hurt the most out of this are the very people that this bill is seeking to protect—that is the insured. Those insured persons will be sitting there trying to reach a resolution and it may well be in the insurance company's and the EQC's and indeed the third party's interests to delay that as much as possible and in fact they may be reluctant to even reach a resolution. The whole point of this is to move on from this to get people's claims settled. These claims are the most difficult claims. That's why they haven't been settled. We all wish they were but wishing isn't going to help. We actually need to put in the legislative framework that is fit for purpose and without this SOP 227 that will not happen. So I would also like to hear from the Minister in the chair. This is actually I think an extremely reasonable SOP. Both of the SOPs are extremely reasonable. They're not political. This has got nothing to do with politics. It's about a resolution for the people that matter and the people that matter are the insured people that have waited for quite some time for a resolution. It is beyond me why the officials missed this one and we certainly did point it out through the select committee process where we had some fantastic presentations from those giving evidence to the Governance and Administration Committee. The committee was engaged on this whole issue right across the tables so I just don't know why that hasn't happened. As I said our support is very much dependent on these SOPs going through and we want a good result out of this but we don't believe fixing one wrong with another wrong is the way to go. This is about justice and it's in the name so we want justice. We don't want an unjust process. We don't want the principles of natural justice nor the principles of a one-way justice system trampled on by this bill which is supposed to be in the best interests of the insured persons and it's my proposition that at the moment this bill is not. These two SOPs are the first two that I'll speak to on this and we must have these passed for our support. Thank you."