Labour pledges new KiwiBank-style local insurer
Labour pledges new KiwiBank-style local insurer to take on foreign dominance
By Pattrick Smellie in Christchurch
Nov 2 (BusinessDesk) – A Labour-led government will instruct New Zealand Post to expand its fledgling insurance business to offer general insurance to compete with an industry currently dominated by foreign ownership.
Labour leader David Cunliffe unveiled the policy at the party’s annual conference in Christchurch, where he said the experience with insurance companies following Canterbury’s earthquakes had revealed slow payouts and “patchy” service.
He linked the policy to the decision to meet in Christchurch in the year ahead of the 2014 election.
“In this very brave city, I am announcing that Labour will confront the challenges of an insurance industry that is no longer Kiwi-owned; one we know from painful experience has not met Canterbury’s needs.”
“Just as KiwiBank gave us a customer-focused, low cost Kiwi-owned bank, KiwiAssure will give everyone a choice for better service, competitive premiums and local ownership that keeps profits here.”
The policy was the major point of substance in a day of disciplined party policy-making in which potential areas of contention stayed off the conference floor.
“Subject to a business case, KiwiAssure will be a sister company to KiwiBank and will evolve out of the existing Kiwi Insurance Ltd”, which currently offers life insurance. The insurer would be supported by an initial capital injection that would be smaller than the $80 million required to establish KiwiBank in 2001.
NZ Post would be able to support KiwiAssure, despite financial stresses that saw announcements yesterday of up to 2,000 jobs over the next three years. NZ Post had been “prudently and well managed for many years,” said Cunliffe.
“Labour believes that a new locally-owned insurance competitor will put downward pressure on premiums, even though it faces the same reinsurance costs of other insurers. That is because KiwiAssure will be looking to attract new customers and won’t face pressure to maximise dividends for offshore investors.”
Cunliffe addressed a rapturous crowd at the conference where, just last year, he faced censure and eventual demotion for failing to declare loyalty to David Shearer, the leader he ultimately replaced in August.
Claiming a 75 percent increase in Labour Party membership this year, Cunliffe said he could not be more different than Prime Minister John Key in his aspirations and beliefs, despite both men growing up in Christchurch.
Deriding National’s drive to intensify dairying, mining and oil and gas exploration, Cunliffe got a cheer for suggesting the government “doesn’t have a fracking clue.”
Among new policies announced in a stump speech covering familiar Labour policies, Cunliffe promised a “preference to buying Kiwi-made timber” for the Christchurch rebuild and an “energy-rich plan for Southland” should the Tiwai Point aluminium smelter close down.
Earlier in the day, delegates voted to amend Labour’s policy to raise the age of superannuation entitlement from 65 to 67, removing reference to a specific age but leaving intact the intention to raise the retirement age to make the state pension affordable.
While the president of the Council of Trade Unions, Helen Kelly, told delegates the union movement was now totally opposed to the TransPacific Partnership free trade agreement, proposals to require public consultation on trade and other international agreements prior to agreeing them were voted down.
Cunliffe said the government should be offering the same level of briefing on the TPP as Labour had offered when it negotiated the free trade agreement with China.
“Until there is a full and open debate, we are not prepared to sign a blank cheque on our nation’s sovereignty,” he said, acknowledging the potential economic opportunity of the TPP.