Initially overseen by Dunedin MP David Clark in his former role as minister responsible for the Earthquake Commission, the Bill’s final reading was ushered through by his replacement, Deborah Russell.
The legislation is timely not just because of the host of natural disasters which have beset New Zealand in recent weeks, but also because it passed its third reading in the same week as the 12th anniversary of the February 22 Christchurch earthquake.
The extensive law changes were inspired by the inquiry conducted by Dame Silvia Cartwright into how the commission responded to it and the earlier Canterbury quakes, at that point the largest and most complex natural disaster in recent memory.
The commission spent more than $11 billion as it assisted Canterbury’s recovery. Cyclone Gabrielle, sadly, may yet top that astronomical amount.
For some Cantabrians, settling their damage claim was a reasonably straightforward exercise, but for a sizeable number the process was anything but simple.
The system, despite bringing on multitudes of additional staff, was often stretched to or beyond breaking point, and its labyrinthine nuances could feel reminiscent of Kafka’s The Trial, in which neither the protagonist nor reader ever found out exactly what was going on.
It soon became apparent that the system, implemented decades before, was not drafted with the complexities of quake damage or the intricacies of modern property law in mind.
Inevitably litigation followed, some still unresolved, as did additional heartache and distress for people whose lives had already been picked up and tossed about by the restless earth.
Hence Dame Silvia’s inquiry and now the law changes, which have put into effect a great many of her recommendations.
The Act retains the core feature of the EQC system — universal coverage, funded by levies on insurance policies, and a cap on how much damage to residential buildings and associated land will be covered.
The cap was a major stumbling block in Canterbury. It then sat at $150,000, a woefully outdated figure: it will now be $300,000, which may well still prove inadequate due to inflation but which is at least somewhat closer to the reality that will be faced by claimants rebuilding their lives.
The Act also aims to embed confidence in the system by clarifying certainty and predictability of cover, and assisting supporting fair and prompt resolution of claims.
It tries to close a myriad of loopholes discovered in the old legislation such as what constituted a residential building: short-term accommodation, homes under renovation and large-scale residential accommodation such as university hostels or complexes administered through a body corporate also raised issues at various times in the rebuilding process.
The Act has had the misfortune of natural disaster dogging its every step — the second reading coincided with more than a month’s rain being dumped on Nelson and Marlborough in just 24 hours.
But the catalogue of misfortune brought by the weather also serves to underline the importance of the commission — now renamed the Natural Hazards Commission to better reflect the breadth of its work.
The law changes will not be immediate: their complexity meant insurance companies asked for and were granted a commencement date in 2024 to prepare for the new system.
But they are important and will almost certainly need to be utilised sooner rather than later.
New Zealand has some of the highest natural disaster costs in the world as a proportion of GDP — quite apart from being the shaky isles, we have active volcanos and, as we have been reminded this month, the country lies square in the exit route of former tropical weather events.
If, as many central and local body politicians have opined this week, New Zealand is going to adapt to the demands imposed by climate change, let alone the challenges that the ever changeable climate in general can pose, a flexible, responsive and compassionate national disaster insurance scheme is essential.
Hopefully, the changes included in the Natural Hazards Insurance Act will create just such a thing.
