Proposed law change may remove cover

Press, 3 December 1987, Page 46

Proposed law change may remove cover

By

KENT ATKINSON

PA Wellington, A Parliamentary committee is investigating whether the way a proposed law change is drafted may exclude from earthquake damage cover properties now automatically protected because they are insured for fire. The Cabinet legislation committee has called for a review of changes the Earthquake and War Damage Commission wants made to the regulations under which it works.

The Justice Department has told its Minister, Mr Palmer, that a proposed regulation may exclude just about all relevant property from cover under section 14 of the Earthquake and War Damage Act, 1944. The purpose of the section is to provide insurance cover for earthquake and war damage on property privately insured for fire damage.

The commission takes a levy of 5c on every $lOO of fire insurance bought, and houses which are not insured for fire are not automatically covered for earthquake and war dam-

age. About 750 of the houses damaged in this year’s eastern Bay of Plenty earthquake were reported to have missed out on commission payouts because they had no fire cover. The commission has paid out nearly all the domestic claims from the March 2 earthquake, at a cost of over $B3 million, but uninsured homeowners are expected to rely on the much smaller national mayoral charity fund of $1.2 million for some financial relief. The deputy chairman of the commission, Mr Lloyd Falck, and its secretary, Mr Milton Allwood have asked to make submissions to the Parliamentary regulation review committee in support of their proposed changes. Mr Allwood has declined to reveal details of the submissions, but said he believed the Department of Justice was wrong. The committee is chaired by Mr Doug Graham, the, M.P. for Remuera, who is also a lawyer, and two other lawyers are among the other M.Ps on the committee.

The Cabinet legislation

committee has once already, on October 27, deferred a decision on the submission of the regulation to the Executive Council. The Justice Department had told Mr Palmer the day before that the proposed regulations would be beyond the legal powers of the commission. The row has brought differing opinions from the lawyers involved. The senior parliamentary counsel, Mr lan Hurrell, told the Cabinet legislation committee the Justice Department appeared to have overlooked another section of the act, re-enacted in the Earthquake and War Damage Amendments Act, 1983, which allows for exempting and excluding any class of property from any provisions of the act But the Justice Department has told Mr Palmer the section on which the Parliamentary counsel relies for the necessary regulation-making power could only have been intended to exclude a minority of the possible classes of insurable property from insurance cover for earthquake and

war damage. And the department has told Mr Palmer the regu-lation-making powers involved fan foul of the basic constitutional principle that delegated legislation should not derogate from, or limit an act of Parliament and parts 'of ' the section Involved should be deleted. The department also criticised the absence of any requirement in the proposed regulations for advising interested parties of any determination by the commission. Mr Hurrell told the Cabinet legislation committee that it was clearly impossible to notify all the interested parties because it would be every person who had a fire insurance policy. But the department’s lawyers have told their Minister that an obligation to publish a public notice in the main daily news-, papers would not be too great a burden, and that preferably an obligation to notify all insurers should be included, with insurers obliged to tell policy holders of the extent of their cover.