Bipartisan backed Natural Hazards Insurance Bill will make changes

Arena Williams (Te Aitanga-a-Māhaki, Ngāi Tahu, Ngāi Tūhoe) is the Labour MP for the Auckland electorate of Manurewa. She is a lawyer and mother of two. Stuart Smith is the National MP for the South Island electorate of Kaikōura. He is a former grape grower, winemaker and inducted as a Fellow of the New Zealand Winegrowers Board for services to the wine industry.

OPINION: With extreme weather events expected to happen more regularly, resulting in slips, floods and falling trees, do we need an overhaul of insurance laws and Toka Tū EQC’s cover?

An MP from each side of the House gives their views.

Stuart Smith, National MP Kaikōura

2023 has seen catastrophic weather events occur across New Zealand. Unfortunately, the worst affected areas are either flood-prone or prone to coastal erosion.

Parliament recently passed the Natural Hazards Insurance Bill which will make a raft of changes in the insurance space.

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Having learnt the lessons from the Canterbury and Kaikōura earthquakes, these changes will make the processes for making EQC claims easier for those affected by natural disasters.

The Bill received bipartisan support as we all agree that the last thing people who have suffered damage to their homes and livelihoods, want is to be waiting months and even years for claims to be processed.

While the focus of recent events should be on recovery and rebuilding, we must also ensure that we do not rebuild in areas that are to prone natural disasters. The term ‘managed retreat’ is one that we are going to hear more about as time goes on. The owners of homes and buildings that are in areas that are more susceptible to natural hazards are going to have to make difficult decisions about the future of their assets.

There is most certainly a role for both local and central Government to play in this process, as we endeavour to build back better. In some areas, it will become uneconomic to get insurance, and it is much easier to make these decisions now before it is too late.

Governments must act swiftly after a disaster strikes, but the pace at which we are seeing the current Government act for the cyclone hit regions is simply not good enough.

We were assured that they would have the information to make a decision in April about whether residents in the cyclone and food-hit communities could rebuild their homes, but that has now been pushed out until the end of May.

These people have waited for months to know if they can rebuild, but the Government is allowing that uncertainty and anxiety to endure.

There is no doubt that we will have more natural disasters, and it is critical that the Government response is timely and based on sound evidence. The flood victims deserve some certainty about their future so they can get on with their lives.

Arena Williams, Labour MP Manurewa

The extreme weather events we witnessed earlier this year were a devastating reminder that New Zealand is not immune to natural disasters, or the impacts of climate change – neither of which we can predict.

What we do know is that the insurance process for claimants affected by these events needs to be as efficient and easy as possible. Insurance is fundamental to helping communities recover after an event, and compensating policy owners for the damage caused by a natural hazard means they can repair their home and move on with their lives.

The Earthquake Commission (EQC) and natural hazards insurance scheme has over the years served people well, but in 2018 this Government commissioned a review of the performance of EQC, and we have used this work to improve the scheme.

Beginning in 2021, anyone with home insurance whose home or land was damaged in a natural disaster can lodge a claim through their private insurer. This simplifies the claims process for homeowners who deal with their insurer in the first instance to assess, manage and settle their claims.

From July 2024, the Natural Hazards Insurance Act replaces and simplifies and clarifies the current Earthquake Commission Act and takes into consideration the important lessons we’ve learned over the last decade. It incorporates a number of the recommendations from Dame Silvia Cartwright’s Public Inquiry into EQC.

EQC will also transition to a new name – Toka Tū Ake – Natural Hazards Commission. Toka Tū Ake translates as ‘the foundation from which we stand strong together’ – acknowledging the organisation’s role supporting New Zealand to both prepare for and recover from natural hazards. Its mandate extends further than just helping people recover from earthquakes.

Our natural hazards insurance scheme supports us to have one of the world’s highest rates of residential property insurance. It is crucial New Zealanders can continue to get affordable insurance cover, and have their compensation paid as quickly as possible.

Alongside this work, this Government will always be there to support communities affected by extreme weather events and natural disasters.

We’ve provided almost $500million in support across all areas of recovery from Cyclone Gabrielle, and we remain committed to helping people and businesses recover. We will continue to closely monitor the needs of local communities and work with local agencies, iwi and councils as we move from response to the recovery and rebuild from these extreme weather events. While we can’t predict these events, this Government can be counted on to support people through them.