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Earthquakes, Canterbury—Insurance

Wednesday 28 September 2011 Hansard source (external site)

Dalziel5. Hon LIANNE DALZIEL (Labour—Christchurch East) Link to this
to the Prime Minister

When he said “if we want to be the insurer of last resort right here as we stand today, everyone needs to understand what we’re signing up for”, was he indicating his acceptance of the Government undertaking that role, or was he ruling it out?

KeyRt Hon JOHN KEY (Prime Minister) Link to this

I was doing neither, which is quite obvious from my full statement, which is as follows: “if the Government walks in today and writes a blank cheque, it won’t be a short-term fix. It’ll be there for a long time, it could be tremendously expensive, and it’ll be very difficult to exit. So there is no free lunch here. If we want to be the insurer of last resort, right as we stand here today, I think everyone needs to understand what they’re signing up for. My view, having assessed it all, is that we need to give that a lot more time. I think we need to work our way through it, and we need to try and continue to work with the private sector providers. If in the end having tried everything that all fails, then we’ll come back and have another look at it.”

DalzielHon Lianne Dalziel Link to this

Is he still confident that insurers will start to write new policies in Canterbury soon, as he said last week, and if they do not do so soon, at what point would he consider that Government intervention would be necessary to stop the insurance money bleeding out of our economy and crippling the recovery effort?

KeyRt Hon JOHN KEY Link to this

Insurers are writing new contracts; I met people last week who had received those contracts.

DalzielHon Lianne Dalziel Link to this

Is he aware that the delays in getting back to a functional insurance market in Christchurch—something described by chamber head Peter Townsend as “a cancer” only a couple of days ago—is holding up the construction of business premises and now causing severe difficulties for an industry that has been told to prepare for a boom but is currently starved of work; and how long will his Government tolerate this cancer on our recovery as a city?

KeyRt Hon JOHN KEY Link to this

There is no doubt that insurance issues are slowing up the rebuild in Christchurch. That is because the seismic activity at the moment makes it difficult for the insurers and their reinsurers to fully assess the position in Christchurch. I think the view of insurers and reinsurers that Gerry Brownlee met when he was in Monaco is that they will want to re-enter the market. The fact that the New Zealand insurance industry is still interesting to offshore people is evidenced by the fact that there are considerable bids for AMI Insurance, and unless I am missing something, by the time the Labour Party had its third go at trying to get this right, it was arguing it would not rush in and offer insurance straight away, either.

DalzielHon Lianne Dalziel Link to this

How long does he think Gwenda Williams and Darryl Dawson should be forced to live in a caravan with two toddlers, given that they are now “effectively stuck” with “No house, no new build insurance, therefore no mortgage and no build.”, before the Government sees itself as having a role in the insurance market?

KeyRt Hon JOHN KEY Link to this

It is impossible for me to comment on the individual circumstances of a couple. But if that couple want to contact the offices of, probably, Phil Heatley or Paula Bennett, then we are more than happy to try to facilitate them to get into another home.

DalzielHon Lianne Dalziel Link to this

Will he return to the Christchurch communities that he spoke to after both earthquakes and explain why his pledge to do everything he could to help them did not extend to ensuring there is a functioning insurance market, without which there is no recovery?

KeyRt Hon JOHN KEY Link to this

I do not want to labour the point, but let me put it into a bit of context so that the member understands it. There has not been a natural—

DalzielHon Lianne Dalziel Link to this

Will you come back? Answer the question.

KeyRt Hon JOHN KEY Link to this

Well, I have been back on numerous occasions, actually. There has not been a natural disaster in the developed world that has had a bigger impact on a developed economy than the Christchurch earthquake. The Government, in response to that, has offered to buy every home in the red zone at rateable value. To the best of my knowledge as Prime Minister, I cannot find another example of that anywhere in the world. In 2011 the Government provisioned $5.5 billion for the rebuild of Christchurch, when it ran its zero Budget. The Government has stepped in to provide support for AMI Insurance, the largest insurer in the Christchurch region, because a failure to provide that back-up financing support if required by AMI would have left literally tens of thousands, if not hundreds of thousands, of Cantabrians without a position where they had insurance. The Government has established the Canterbury Earthquake Recovery Authority and passed legislation. The Government has appointed a full-time Minister responsible. I have been to Christchurch either every week or every second week since the first earthquake took place on 4 September 2010. I believe the Government has taken remarkable steps to try to stand alongside the people of Christchurch. I really find the member’s statements to be a little offensive.