Smith StuartPart 2 Amendments with delayed commencementSTUART SMITH (National—Kaikōura): Thank you Madam Chair. Well in Part 2 I want to concentrate on Supplementary Order Paper (SOP) 156 in my name which actually sets out a process and would add in new clause 11A which states: (6) An insured person's private insurer—(a) may be given notice and be delivered a claim and particulars under subclause (1) by the insured person; and (b) for any claims that are received under paragraph (a) is to be considered as having been appointed an agent of the Commission—". This is effectively putting in what was the memorandum of understanding (MOU) between the Earthquake Commission (EQC) and the insurance companies which was brought in for the Kaikōura earthquakes. It was brought in hurriedly; it worked extremely well. In fact the claim rate was far faster in Kaikōura than it was in Christchurch albeit that Christchurch was a more complex series of events rather than a single one.However having said that under the MOU that allowed for the insured just to contact the insurance company and everything else would fall into place. There are of course the issues of getting your claim settled but that's always the case. However in Christchurch what was required was a claim to be registered with EQC to contact your insurance company EQC would then check you were insured and then you would go through the process where the claim was assessed. In some cases some claims are only now being passed on to insurance companies as being over cap. Then once the claimant is informed that they are over cap they then go to the back of the queue with the insurance company—an unnecessary bureaucratic step that really was pointed out by everybody—everybody agrees it's unnecessary and not really workable. You can understand why it was set up that way in the beginning. However we've learnt a lot now and some of the claims—I'm going to go through some of the issues.But first of all I want to point out in the letter of expectations that was sent by the Minister the Hon Dr Megan Woods to the Hon Dame Annette King on 6 March 2018. I'm just going to quote from that: "I recognise that EQC is trialling a new approach with private insurers to respond to the Kaikōura earthquakes and I expect a detailed report on the board's review of this pilot." Now there has been a report that's come back and said it was a very good operation in the way it worked. Then she goes on to say: "I expect [the] EQC to work with the wider insurance industry to ensure that if another significant natural disaster event were to occur there is a commitment to ensuring that appropriate mechanisms are put in place as a priority to ensure that claims can be resolved in an efficient and timely manner prior to any legislative change that may be made."That's good. It's got great intentions. It wants to move on with the process. So why isn't it in this legislation? Well of course they've got a review which Dr Webb just referred to earlier. That will come out and say exactly the same thing: that we need this in the legislation and we'll have to wait an undetermined amount of time to have this other bill come up but unfortunately mother Nature doesn't wait for bureaucratic processes. Mother Nature could throw another disaster at us whether it be a tsunami a major event like Edgecumbe or a Kaikōura event or a Christchurch or Wellington event—something of that nature. Then we have people scurrying around trying to come up with an MOU and move on into the process. I think that's a totally unnecessary waste of time.My SOP will cover that off. It slips into the bill very seamlessly and achieves exactly what is needed. Interestingly I contacted the other parties on this and the Greens said "Well yeah we think it's a great idea but the Minister would like to wait for the new legislation." I got an even more glowing response from New Zealand First. They say it's a good idea but their hands are basically tied. So I want to go through—Madam Chair with your indulgence—the responses I've gone through. The Government and EQC came up with reasons why this would not work and what the issues were.They came up with five areas they had great concerns with. The first one is that there would need to be robust audit and accountability mechanisms to manage the financial costs and risks of outsourcing claims handling. An absolutely valid response and a valid concern that EQC might have; however all insurance companies have reinsurance and they have the same issues they have to go through. They have to be audited and accountable to the reinsurers because they're acting as agents effectively for reinsurers. EQC also acts as agents—it has reinsurance as well. So this would actually work in the same way it does with others so it really just seems quite strange that that would be thrown up. Under the MOU EQC in the Kaikōura event had an opportunity at any time by providing reasonable notice to audit observe test or inspect any information to ensure insurers complied with their obligations under the MOU. So all of that's laid out there in those MOUs and the Supplementary Order Paper would ensure that EQC entered into those sorts of arrangements. So that is a non-issue. It's just simply spurious.Their second concern was that they would need clear agreements about the quality of service provided to EQC claimants as well as ongoing accountability arrangements. I think a lot of people in Christchurch would think that was quite ironic coming from EQC quite frankly. But none the less it is something that should be tied off in an MOU or in the contract that they would negotiate with the insurance companies. Once again that was already covered under the MOU in the previous arrangement. So it's quite easily accounted for within my SOP. I think really they are raising red flags that are not needed at all. Insurers acted as EQC agents as I mentioned and in accordance with the Earthquake Commission Act and guidelines provided by EQC—so worked within EQC's own guidelines. Quite a spurious claim yet again.Actually after the Kaikōura earthquake there was a 70 percent customer satisfaction with insurance claims and that's compared to 43 percent with the Canterbury earthquake sequence and 51 percent with the non-Canterbury earthquake disaster sequences. People are always unhappy with their insurance companies but in the long run 70 percent customer satisfaction is a pretty damn good number I think.Their third concern was there are robust arrangements between EQC and private insurers for sharing relevant customer and claims data in a timely and secure way. Well under the MOU insurers would first obtain a privacy waiver from a customer to allow information sharing between EQC and the insurer—so that was already in place—and that insurance could also seek exemptions under section 54 of the Privacy Act in respect of certain information sharing. All of that was covered under an MOU. It all could be arranged under my SOP so it's a fine piece of legislation—it's not too late Mr Webb. I can see he's wavering.The fourth point was that the insurance industry has the ongoing capability and quality of preparation to manage future events particularly large-scale events. I mean—come on. The insurance industry has a far larger standing army than EQC will ever have and it has international links to other insurance companies around the globe. They are in a far better position to gear up for large events than EQC is. We've seen that in the past. That's why the MOU was signed in Kaikōura—because it was recognised. I'm simply building on that.The final point was that there are appropriate and robust arrangements either with insurers or elsewhere to replace any loss of adaptability or flexibility in natural disaster response as a result of EQC no longer directly participating in claims handling. This is nothing more than patch protection by EQC and the reality is we deserve better than that. New Zealanders deserve the best service that they can get. This SOP actually will ensure that and I implore the members on the other side of the Chamber to see some good sense and get in behind it. Thank you."