At the launching of the Insurance Brokers Association New Zealand IBANZ at the Auckland Club last night the Hon Jim
McLay CNZM QSO former Attorney General and Minister of Justice said in part:
“In my six years as Attorney General and Minister of Justice I often found myself, for some reason, as the “lightning
rod” for those who believed that their industry should be subject to licensing and regulation.
In many cases, these approaches were well motivated; but, sometimes, were driven by self-interest (and it couldn’t
always be described as “enlightened self-interest”).
Even though the public good was always citer, I rejected all of those approaches; although you will note that, on the
basis that rust never sleeps, some of these interests never gave up, and we now do have regulation, or proposed
regulation, in some of those areas.
Yours was and is essentially a business-to-business industry and, by-and-large, the parties involved in such
transactions were and are capable of looking after themselves.
I looked to see what mischief I was being asked to address; and I couldn’t see one.”
He went on to say:
“Quite apart from anything else, I take the view that it usually costs as much to regulate a market of four million
people in New Zealand as it does, say, to regulate one of twenty million in Australia.
Certainly, over the years, some shaky operators have been “massaged out” the market but, overall, the system has worked
well.
Australia’s heavy-handed approach didn’t stop the failure of HIH (the biggest corporate collapse in Australian history),
nor the collapse or near collapse of other Australian insurers, nor the problems that have emerged in the reinsurance
sector.
By comparison, in New Zealand, with our very light-handed approach (little more than a capital requirement) we haven’t
had a collapse since that of Standard Insurance in 1960 - 45 years ago.
Against that background, I seriously question whether there is a need for anything other than self-regulation of your
own industry.
As I have already observed, yours is essentially a business-to-business role; and it is hard to see that there would be
any benefit from the inevitable administrative and bureaucratic costs of licensing and supervision.
In my view, there is no identified mischief that really has to be addressed.”