Wagner NickyHon NICKY WAGNER (National): Thank you very much Madam Chair. I'd like just to take a short call on Part 2 particularly the issue about caps. Now in this piece of legislation we're talking about lifting the Earthquake Commission (EQC) cap from $100000 to $150000 and so for those people who may be listening today or who may be in this House who haven't been involved in a natural disaster I'd just like to explain that the cap determines the responsibility of the Earthquake Commission in terms of paying out insurance and where that is passed on to the responsibility of insurance companies. So it determines who pays and actually who pays beyond the earthquake insurance and the insurance companies because of course those companies are reinsured as well. The cap is the first part that in this case under the Christchurch earthquakes and the Kaikōura earthquakes was $100000 plus GST and then after that it passed over to the insurance companies. So it was a gateway and there was a huge amount of debate around this gateway—this $100000—because I think the issue was that as a gateway it became a bit of a bottleneck. So a lot of people were very concerned—Would I be dealing with the Earthquake Commission because the amount of insurance I needed was less than $100000 or would I be dealing with my insurance company?"—and to get through that gateway was the first decision that had to be made before people went on and got some action out of the insurance companies. Of course this was further complicated in Christchurch because there were multiple seismic events and in lots of cases the $100000 started again. So there were incredibly complex issues. It was complex for the people who were insured it was complex for the Earthquake Commission itself and it was complex for the insurance companies but it was also complex for the reinsurers. By lifting it to $150000 at least you move it a little bit further out and it makes it a clearer situation to have happen. So generally speaking of course we support it. This was part of the discussion document that we started back in 2012 and this is one of the first recommendations to increase the cap. Originally that $100000 cap was settled right back in 1993 and of course costs have escalated since then. So that deals with the cap. But I'd also like to talk about Stuart Smith's Supplementary Order Paper (SOP) 156 and this is about how you organise earthquake claims in the future. It's relevant to the cap because as I've said the Earthquake Commission was the gateway to making a claim originally in Christchurch—and it still is now under this legislation—but what Stuart Smith is introducing is another method and this is a method that we learnt from Christchurch. It was a method that has been tested in Kaikōura and it has tended to work well. What Stuart Smith is putting in his SOP are the results of the learnings from Christchurch and some of the things that have worked well in Kaikōura. So what he's suggesting is that instead of the Earthquake Commission taking that claim working their way through it—whether it's $100000 or not—and then after that time and past that bottleneck passing it on to the insurance companies the insurers' private insurers begin the claim and if that claim is under $150000—it would be in this case—then it goes back to the EQC. So it's turning the whole process round the other way. It's giving the process to begin with to the insurance company—who has the biggest exposure generally speaking—and then passing it back to the EQC if it's only a small claim. I think that makes good sense. It makes good sense simply because everybody does have an insurer in New Zealand—actually that's because the EQC gives them the first amount of money and we've already talked in the past about how fortunate we are to have an Earthquake Commission because people are insured. So that gives them the opportunity to work with the insurance company. They have the resource they have the experience they have the expertise and they can start that claim. We believe that that would be a much more streamlined process and it has actually proved to be in Kaikōura. So I'm very keen to see this SOP supported. I think it's the right thing to do."