Mike Hosking: Insurance problems could cost us billions. We need action, not gab-fests

OPINION

What is it about working parties? Having seen a record set for them with the arrival of this government, Wellington City Council held a gab-fest this week on the very serious issue of the capital's insurance market.

And it has decided, at the event's conclusion, to set up a taskforce.

More yack to achieve what?

The government itself is showing a passing interest in the issue. They seem reassured by the industry who, to be honest, I would be second-guessing.

What we know about business is they have their own best interests at heart, and driving that thinking is, of course, the bottom line. I don't blame them for that, and this is why this issue is so troubling, complex, and serious. The industry says there is no shortage of players offering insurance cover, but that's not the real story.

The real story is, what does that cover cost?

In that is the danger, and it is why the government probably needs to pay a little more attention than they are. Kris Faafoi, the Minister, is not convinced about one of the solutions, and one of the solutions is spreading risk. In other words, everyone pays for people who live in Wellington, or on a cliff, or in a seismic zone, or by the beach.

His argument, and he's got a point, is if we spread risk, can we trust the industry to truly play ball and spread it without gouging? And that's before you get to the debatable fairness of the practice. Why, if you're in Invercargill, are you paying part of the price for someone to live on a cliff top in Thorndon in a city built on a fault? It's not an unfair question.

The other way to go is to have some sort of state-based coverage. But the obvious flaw is the private industry gets to cherry pick the good stuff and the poor old government, or the taxpayer, gets to cover the stuff no-one wants to touch - along with its inherent risk and costs.

And then we get to the big picture, the long term picture. How much longer are we going to insist on operating major centres in areas of major risk? It's one thing to price a clifftop house off the market, or a beachfront bach, but an entire city is a major issue.

Already the cost of bringing any number of buildings up to earthquake scratch is proving costly, if not prohibitive, for a lot of landlords and home owners. There are apartment buildings that will cost the entire value of the complex to fix. Who's got the money, who's got the inclination, and who covers the insurance?

For how much longer do we want to add to the problem by simply pushing out timelines, or imposing repair rules that people simply won't meet? Further, whose problem is this? Central government? Local government? Insurance companies? Home owners? Or ultimately all of us?

Who is in charge of this? Who is owning this? That is what leadership is, and I am not sure that yet another taskforce is a demonstration of it.