The New Zealand Government has tabled a bill proposing insurance disclosure duty reforms to give consumers more protection, Commerce and Consumer Affairs Minister Andrew Bayly says.

“Under this bill, there will be no more guesswork for consumers,”  he said. “The bill makes a really positive change for consumers by shifting the onus of disclosure duties to insurers.

“Right now, consumers must disclose everything that might be relevant to an insurance policy. But it’s difficult for everyday Kiwis to know what information is relevant.”

The Contracts of Insurance Bill had its first reading in Parliament last week.

On the disclosure duty, the bill makes it insurers’ responsibility to ask the right questions, to reduce their ability to void cover or refuse claims. The bill’s explanatory note says consumers are sometimes unable to make claims because they innocently did not disclose matters they were unaware they had to disclose.

“We have all heard stories of people being denied compensation because they didn’t realise they had to disclose certain information, or waiting months on end in limbo ... for a decision from their insurer,” Mr Bayly said. “This isn’t fair or right. These reforms are long overdue.”

“Going forward, insurers must use simple terms to make insurance policies easier to understand. They will also have to pay customers within a reasonable time frame. These are big wins for consumers who currently face a complicated and unwieldy process.”

Mr Bayly says the government has consulted with the industry and he hopes to have the bill passed by the end of the year.

Insurance Council of New Zealand CEO Kris Faafoi says current legislation is widely acknowledged to be outdated, unwieldy and not fit for purpose.

“This bill has been long awaited … the sector will work closely with the Government and regulators to ensure that the bill and other regulatory reforms that the industry is facing are done in a co-ordinated way that benefits both consumers and the industry as a whole,” he said.

“We look forward to the opportunity to make submissions on the bill and ensure there is clarity and certainty for all parties in the long term.”

The closing date for submissions is June 3. Click here to make a submission and here for the bill.