NZ reviews ‘antiquated’ insurance contract law
New Zealand’s insurance contract law is to be reviewed, with the Government describing current arrangements as “antiquated and fragmented”.
Commerce and Consumer Affairs Minister Kris Faafoi says the review will also consider the case for greater regulation and supervision of insurer conduct, after the International Monetary Fund identified gaps.
Terms of reference were released last week and the Government expects an issues paper will be available mid-year, paving the way for policy decisions and legislative action next year.
“There are significant problems with New Zealand’s insurance contract law, which are undermining the effectiveness of our insurance markets and impacting those who do not receive the support they anticipated from their insurance policies,” Mr Faafoi said.
Contracts are covered by six legislative acts, with two dating back to 1908, while general or financial services laws also apply to insurance products.
The Government says previous reform plans have stalled, while laws have been updated in markets including Australia and the UK.
Mr Faafoi says onerous disclosure requirements have emerged as a key issue, with consumers sometimes not covered for losses or unable to claim because they did not disclose seemingly unrelated matters.
The review will also consider consumers’ ability to find and compare prices and policies and the scope of “unfair contract terms” under the Fair Trading Act.
Technical issues identified by the Law Commission and insurance industry will also be considered.
Insurance Council of New Zealand (ICNZ) CEO Tim Grafton says the industry already self-regulates to a much greater degree than current regulations require.
“We welcome the review and look forward to contributing to it,” he said. “There are currently a large number of laws that impact on insurance contracts in New Zealand.
“This review will be an opportunity to consolidate those laws in a way that serves everyone.”
ICNZ is reviewing its Fair Insurance Code, with an updated version to be released next year.