The Insurance Council of New Zealand (ICNZ) has rejected a Labour Party campaign promise to establish an insurance commissioner, but it supports plans to overhaul Earthquake Commission levy collections and payouts.

“We have concerns about setting up what looks like a third regulator for the industry, because the Reserve Bank and the Financial Markets Authority already have responsibilities for regulating insurers,” ICNZ CEO Tim Grafton said.

“This would add costs to insurers, which would inevitably be passed on to policyholders.”

ICNZ backs collection of Earthquake Commission levies through rates, rather than on home insurance, and would welcome an increase to the $NZ100,000 ($93,625) payout cap.

“It is good policy to remove levies from insurance, to help keep it affordable and available for all,” Mr Grafton said. “Local government should be reimbursed for the cost of collection.”

ICNZ says the payout cap was meant to represent the cost of rebuilding a modest home, but it has not changed since 1993.

The opposition Labour Party has released its insurance policies as it prepares for the September 20 general election.

Its Earthquake Commission spokesman Clayton Cosgrove says the Canterbury disaster shows the industry and the commission were unprepared for a major event.

“An independent insurance commissioner, funded by a levy on insurers, will take a hands-on role in overseeing the industry and making sure it works better than it has when it is most needed,” he said.

The commissioner would review and make recommendations on Earthquake Commission and insurance company actions.

Mr Grafton says insurers have done “extraordinarily well” progressing quake claims, given the complexities.

“If there were an independent review we would welcome the cold light of objectivity being shone on every nook and cranny of the recovery because I am confident we would not be found wanting,” he said.

ICNZ says Labour’s policy does not address issues such as how the Earthquake Commission will cover land in future.