Williams Andrew: Insurance (Prudential Supervision) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeWilliams Andrew: Insurance (Prudential Supervision) Amendment Bill — Second Reading[Sitting date: 20 August 2013. Volume:692;Page:12655. Text is incorporated into the Bound Volume.]ANDREW WILLIAMS (NZ First):I rise to take a call on behalf of New Zealand First on the Insurance (Prudential Supervision) Amendment Bill. New Zealand First will be supporting this bill. We believe it is vitally important that the fundamental situation in New Zealand is that we have a sound well-functioning insurance sector. It has been clearly proven over recent years during our major natural disasters that unless we do New Zealand is at great risk. It is most important—and I think all parties in this House would agree—that we have a robust insurance sector with substance and that of course includes our own Earthquake Commission.The insurance sector underpins the basics of our modern economy. If we do not have a sound insurance sector our whole economy could well suffer. 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 very highest level. The Christchurch earthquakes demonstrated the critical role of insurance and they 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 no oversight by this Parliament and by the Government to ensure that the right safeguards are put in place in terms of the insurance sector. But the major disasters have 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 is up to date and works well. New Zealand First appreciates the significance of the insurance sector that it operates well in New Zealand and that at this 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 however. This bill goes a long way to tidying up areas such as that. But New Zealand First does have a few questions such as the 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 do have some concerns about that. We would welcome the Minister of Finance and the Government explaining this a little 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 an insurer to slip out the back door because its financial ratings were not held to the highest level throughout its activities in New Zealand.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 betteroversight. New Zealand First will be supporting this bill as we believe it takes positive steps for improved controls over the insurance industry and it will enhance the effectiveness of the Insurance (Prudential Supervision) Act. So New Zealand First will be supporting it.