New Zealand is considering ending insurance exemptions from unfair contract terms laws and encouraging comparison websites as part of legal framework changes.

An Insurance Contract Law Review options paper also examines problems created by disclosure rules for consumers and a range of ways to make it easier to read and compare policies.

“Insurance contract law is decades beyond its best-by date,” Commerce and Consumer Affairs Minister Kris Faafoi said. “Consumers should have confidence that they’re covered when the unexpected happens, so we are going to make changes.”

The paper includes three options for unfair contract terms reform, including taking a similar approach to a proposal being considered in Australia. The paper says that would involve tailoring the generic unfair contract term exceptions to accommodate specific insurance contract features.

Suggestions to make it easier to understand and compare policies include use of plain language, clearly defining core wordings, summary statements and requiring insurers to work with third-party comparison platforms.

The options paper process comes as the Government also consults on rules governing the conduct of financial institutions.

The Insurance Council of New Zealand says it will make a submission and will be “watching carefully”.

“Nobody in their right mind would argue against better consumer outcomes, but the devil is in the detail,” CEO Tim Grafton told insuranceNEWS.com.au.

“It is important that we get it right and, while we are generally supportive, we do have concerns that if a simplistic or broad-brush approach is taken, that could lead to consumer harm.”

Submissions are due by June 7 on the financial institutions conduct review and by June 28 on the insurance contracts law options. Further details are available here.