The fact that most New Zealand businesses are served by insurance brokers has been quoted as a major reason why the country’s existing duty of disclosure law should remain in place for commercial clients.

The Insurance Council of New Zealand (ICNZ) says it supports changes to disclosure laws for consumers, but argues “the case for change in regard to business insurance contracts is limited”.

New Zealand is currently reviewing its insurance laws in three areas: disclosure of information to insurers, unfair contract terms exemptions and insurance policy wordings.

“There are key differences with insurance for businesses, including that most business insureds are advised by brokers and that commercial insurance comes in many forms and can relate to complex business risks and involve bespoke cover, making understanding the specific nature of the risks particularly important,” ICNZ says in a submission.

“This latter aspect also makes it more difficult to cover all possible issues in a set of standard questions.”

ICNZ says there is merit in the proposal to ask consumers a list of questions.

This option has the backing of most ICNZ members “on the basis it is most certain for consumers as it reduces the risks of inadvertent non-disclosure by recognising that insurers are better placed than an insured to identify the categories of information that they consider to be relevant,” the submission says.

“It also generally aligns with how insurance products are distributed to consumers.”

ICNZ says its is also open to the other option where an insured would have to disclose “what a reasonable person would know to be relevant”.

“Whichever option is progressed for consumers, its effectiveness and workability will depend on the detail of its design and the drafting of the legislation.

On the unfair contract terms regime, ICNZ says current provisions relating to its regulation under the Fair Trading Act are appropriate and should be retained.

“Importantly, it should be noted that the current provisions applying to insurance… do not permit insurers to issue unfair contracts. The Act requires insurance terms to be fair and specifies a limited number considered to be reasonably necessary to protect the legitimate interests of the insurer.”

The council says “tailoring generic provisions” for insurance would be the most appropriate way forward if the Government presses ahead with removing the industry’s exemptions from unfair contract terms laws.

It does not support the other two options flagged in the review.