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New Zealand to consult insurers on climate adaptation

New Zealand’s government is working on a Climate Adaptation Framework and plans to invite input from insurers and banks later this year, Small Business and Manufacturing Minister Andrew Bayly says.

Mr Bayly plans an extensive financial services laws overhaul, and is reviewing the efficacy and burden on financial advisers of various legislation.

He will soon seek cabinet approval to introduce the Insurance Contracts Bill “so insurers and policyholders have greater certainty about the deals they’re striking”.

"Insurers will need to know what their obligations will be under the new Bill,” he said. “My decisions will be guided by my goals to promote clarity and certainty for insurers and policy holders, while also ensuring that regulations remain proportionate and risk-based.”

Mr Bayly told attendees of the Insurance Council of New Zealand (ICNZ) annual conference the insurance industry “stepped up to provide invaluable support and security to Kiwi businesses and communities” hit by Cyclone Gabrielle.

Increasing severe weather events mean the insurance sector is “more important than ever,” Mr Bayly says, and it is important the government and sector are aligned on how to approach climate resilience, which impacts key issues like affordability and availability.

"We will need that security more than ever as we face increased frequency and severity of climate events and other natural disasters,” he said.

“We need to remain adaptable ... the insurance industry has a big role to play in this.

“Insurance affordability and reinsurance are big challenges, how we overcome them will take some creative thinking.”

Mr Bayly says he is reviewing the Conduct of Financial Institutions and wider conduct regulation in New Zealand, and wants to consolidate and standardise financial markets conduct licensing requirements next year.

“This will involve a move to a single conduct licence, and a separate prudential licence. Currently some institutions have to hold up to 5 licenses.”

The Business Payment Practices Act has just been repealed as Mr Bayly said it threatened to impose unnecessary compliance costs on thousands of businesses without speeding up business payment times.

"More can be done to improve payment times without regulatory intervention ... We will enforce government department payment targets, extending these to some crown entities, encouraging the adoption of eInvoicing by requiring government agencies to pay within five working days, as well as working with BusinessNZ to establish a voluntary code for larger firms to pay more regularly.

“My focus will be on making financial policy and regulatory settings simpler, removing unnecessary barriers and transactional costs.”