Bayly AndrewANDREW BAYLY (National—Hunua): Thank you Madam Assistant Speaker. It's great to have the opportunity to talk on this Earthquake Commission Amendment Bill. I haven't actually had an opportunity to talk on it even though I was a member of the Finance and Expenditure Committee so it's a great pleasure to be doing that tonight. I just thought I'd particularly wish you Madam Assistant Speaker merry Christmas for just as my other colleagues have noted the great job that you've done this year and your role acting as an independent arbiter of these fine debates in this great institution.Of course to the members of the Finance and Expenditure Committee it's been a pleasure working with you this year ably chaired by Mr Wood over there. But also I think as a committee across the House it has been an effective and hard-working committee this year and I think we've achieved quite a significant amount particularly with some of the tax bills and more recently we've just debated the Reserve Bank bill only a matter of a couple of hours ago.But of course this is about this bill which is the Earthquake Commission Amendment Bill. First thing: we've made progress with this bill. We've made some progress but unfortunately I don't think we've made the progress that we should have made with this very very important issue. I'm reminded of the time after the Kaikōura earthquake when I spent three days with that hard-working local MP Stuart Smith driving round the back blocks of Kaikōura visiting farmers and other people who lived in quite remote areas many of who immediately after the earthquake had suffered from a lack of communication—mobile services. Very few people had been visited by anyone—emergency services.In fact the only people we really encountered over the three-day period where we drove into many many places was the local insurance firm who was driving up to make sure that their clients were fine and that they were happy and if they had issues that they were lodging their claims. They were doing that as they were driving around and it was a fabulous piece of service to the rural community but it also highlighted the issues of providing insurance and actually actively putting in place mechanisms following a major tragedy like our earthquake that Kaikōura and Christchurch obviously encountered.That actually meant that those claims could be expedited and completed quickly because that is the purpose of any insurance and of course the role of the Earthquake Commission which is to provide that framework that backstop to major events. Of course it's funded by the Government and unfortunately we've seen wholesale loss of funding over the series of those three very significant earthquake events to the point now that the Earthquake Commission funding has now been largely dissipated and as a result we're in the process of rebuilding that fund. But of course that is the purpose of the fund. The purpose of the Earthquake Commission fund is to actually act in times of difficulty and to pay out and I think that probably strikes at the first issue.Whilst the bill picks up four of the minor issues—and to some extent this is a National Party bill and we originally proposed nine issues to be dealt with in the Earthquake Commission (EQC). Unfortunately the Government only did a half-hearted job and we've only picked up four of those issues. I think one of the outstanding issues—and I haven't heard anyone speak about it tonight but the first one was around the issue of apportionment. This bill ignores this issue which is one of the most fraught issues in the Canterbury experience: namely whether EQC cover reinstates after each seismic event and what constitutes an event for the purposes of that reinstatement. That definition is really really important.Apportionment is the process by which EQC determines who is liable for claims under the Earthquake Commission Act. Without that clarity what you have is the issue of if there is an event who picks up the liability. It may be that EQC has to pick up the liability it may be that a private insurer has to pick up the liability it could be the reinsurance component or there may be other arrangements in place. These costs have to be split up correctly because unless you do so you cannot settle the claim.I spent some time early this year with a very specialised seismic engineer Mr Brown who had been deeply involved in working with insurance claims in Christchurch around the issue of when you had this series of seismic events at what point did the liability to the EQC or to the private insurer—and in some cases the building owner or the property owner had changed their private insurer. So in fact what we ended up with was a whole cascade of events and the question was: who picked up that apportionment? I can tell you that that person a very skilful man—Mr Brown and his team—did very extensive modelling and what they basically had to do was backfill by looking at the seismic events the size of those seismic events and then work out from an engineering perspective to what extent each of those events had affected the building and at which point in any of those seismic events the building had been damaged and therefore create a new claim. I'm saying that that apportionment has not been dealt with at all in this bill.The other thing is around the issue of reinstatement. Of course we had a very important submission from the Insurance Council of New Zealand who said that EQC cover should only fully reinstate at the completion of the repairs during the period of insurance as this would significantly reduce EQC's exposure preserve the principle of indemnity encourage repairs to be undertaken in a timely manner and remove incentives to under-insure for catastrophic events.Now again this is an important aspect and this bill unfortunately falls silent on this issue. I think that it is disappointing that we have a Minister from Christchurch who should have taken the opportunity to deal with these hard issues. It's fine doing the soft issues and to give the perception that you're moving forward—and they are improvements I will acknowledge that—but I think they really should have done more to deal with that issue in itself the reinstatement.Now the other thing I just want to talk to is the very good Supplementary Order Paper (SOP) 156 in the name of Stuart Smith. I think this is where the travesty falls. That SOP which the good member from Kaikōura put up basically said Let's learn from the example of Christchurch" where we had all of these multiple claims going on and the history of EQC having to gear up through having to recruit all these people. In many cases those people had to be recruited from outside the insurance industry and therefore had to be trained in what they had to do in terms of first assessing claims and then ultimately going through the process of settling those claims. So we had to gear up from the start very quickly and immediately following a catastrophic event.That model proved to be less successful than the Kaikōura one where we saw the very good practice undertaken by our Government I should say where a memorandum of understanding was entered into between the EQC and private insurers. That meant that when an event happened—and with Kaikōura what happened is that those people who had significant property damage could immediately lodge a claim with private insurers because that meant they had access to people who understood the insurance industry understood the terms could handle—and had the processes and IT platforms to be able to handle—the level of those inquiries and as a result by filing that claim with a private insurer that claim was therefore activated against EQC. I think it's absolutely a travesty that this has not been picked up. I am aware that Dr Woods talked about speeding up processes but unfortunately missed this very important component. But none the less we will be supporting it but we've got a lot more work to do on this issue."