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Keep disclosure duty on commercial contracts: ICNZ

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The duty-of-disclosure rule should stay for commercial clients, the Insurance Council of New Zealand (ICNZ) says, while backing reforms to consumer contracts.

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

“We support reform of the duty of disclosure for consumers, while recognising the case for change in regard to business insurance contracts is limited,” ICNZ says in a submission on the proposals.

“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. 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 series of questions.

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

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.”

If the Government presses ahead with removing insurance exemptions from unfair contract terms law, the proposal of tailoring generic provisions to insurance would be the most appropriate way forward, ICNZ says. It does not support two other options flagged in the review.

The Ministry of Business, Innovation and Employment is reviewing submissions after consultation closed last month.

The duty-of-disclosure rule should stay for commercial clients, the Insurance Council of New Zealand  (ICNZ) says, while backing reforms to consumer contracts. 

 

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

 

“We support reform of the duty of disclosure for consumers, while recognising the case for change in regard to business insurance contracts is limited,” ICNZ says in a submission on the proposals. 

 

“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. 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 series of questions. 

 

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

 

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.” 

 

If the Government presses ahead with removing insurance exemptions from unfair contract terms law, the proposal of tailoring generic provisions to insurance would be the most appropriate way forward, ICNZ says. It does not support two other options flagged in the review. 

 

The Ministry of Business, Innovation and Employment is reviewing submissions after consultation closed last month.