Firms fear rise in premiums if NZ drops Privy Council

By PAULA OLIVER

Insurers say it is too early to tell if abolition of the right of appeal to the Privy Council will mean higher premiums for some businesses.

Major accounting firms and business lobby groups have expressed concern that the introduction of a new court, with no track record, will increase uncertainty for New Zealand businesses with international insurance.

Deloitte Touche Tohmatsu chairman John Hagen said the risk of premiums increasing was impossible to quantify, but a Supreme Court would not have a positive effect on insurance cover.

"If we are insured in an international market that is familiar and comfortable with international law, which is basically the law in the United Kingdom, we will be moving away from that. It cannot have positive effects on our insurance cover. It must have negative effects."

Hagen said anybody with insurance or reinsurance in the UK market would be affected - and that included many professional services firms like lawyers and accountants.

Deloitte joined Ernst & Young, KPMG and PricewaterhouseCoopers in making a joint submission to the justice and electoral select committee on the Supreme Court Bill.

They argued that the insurance uncertainty would lead to higher costs. The select committee's report back to Parliament acknowledged concern about insurance costs.

It said the committee approached the Insurance Council and was told that insurers would be watching the issue closely, but that the impact would depend on the kinds of judges appointed and their attitudes to liability.

Insurance Council chief executive Chris Ryan said it was too early to know what would happen and any arguments at this stage were based purely on speculation.

Business Roundtable executive director Roger Kerr said the Privy Council's track record was well-established and respected.

"The insurance industry has got a high level of confidence in them," Kerr said. "It is not untypical of courts around the world to regard insurers as organisations with deep pockets and to shift the boundaries of risk in their direction. We will be watching this closely."