Finance and Expenditure Committee moves to wrap up banking inquiry without input from reinsurers, despite recommendation from Parliamentary Commissioner for the Environment

Parliament's Finance and Expenditure Committee (FEC) isn’t planning to ask reinsurers to appear at the banking inquiry despite a suggestion from the Parliamentary Commissioner for the Environment that they do so.

During a session of the inquiry into banking competition last Monday, Simon Upton, the Parliamentary Commissioner for the Environment, said hearing directly from reinsurers would be valuable for the banking inquiry to better understand climate-related risks and their impact on the financial sector.

Upton explained that globally, insured losses came to US$140 billion in 2024, while the economic loss had climbed to US$320 billion globally.

“Now, if you want to understand why banks and insurers should be interested in this, it's those numbers,” he said.

“The Committee should really have the global reinsurers in, these are serious, serious people who have got hundreds and hundreds and hundreds of billions of dollars under management.”

Upton added that reinsurers were “backstopping the insurance system” and probably had more climate scientists working for them than the NZ Government.

“They take this stuff very seriously,” he said.

‘Shut the door’

Interest.co.nz asked FEC Chairman Cameron Brewer if the Committee would be considering Upton’s suggestion to get reinsurers in front of the banking inquiry.

He told interest.co.nz via email that the banking inquiry had opened eight months ago and submissions closed nearly seven months ago. 

“The Insurance Council did submit on our Inquiry into Climate Adaptation, but from what I can see they didn't on the banking inquiry. I would welcome any pertinent evidence or advice they wanted to share following Mr Upton's hearing,” Brewer said.

“However, the Committee has had six months of hearings and we now need to move towards analysis, consideration and report writing.”

Brewer said two regulators would be appearing at the banking inquiry this week – the Financial Markets Authority (FMA) and the External Reporting Board (XRB) – “and then that will probably be it”.

“I’m keen for us to then shut the door, work effectively as a joint committee, and piece together a solid report,” he said.

The Insurance Council of New Zealand (ICNZ) told interest.co.nz it had not made a submission to the banking inquiry, but the insurance industry had “consistently highlighted” the importance of ensuring insurance is affordable and accessible and reducing natural hazard risks from the impact of climate change.

“We would note that in the Government's response to the Finance and Expenditure Select Committee’s Inquiry into Climate Adaptation in January, the Government also acknowledged that the prospect of more frequent and severe weather events may impact the stability of our housing, finance and insurance markets,” a spokesperson said.

Upton told the FEC during last week's submission banks cannot afford to turn a blind eye to climate risks, and it was “entirely appropriate” for banks and insurers to consider climate risks in order to ensure the sustainability of their profits. 

“The physical risks posed by a changing climate are certain, it's just a matter of degree,” he said.