A review of insurance contract law in New Zealand has commenced.
Commerce and Consumer Affairs Minister, Kris Faafoi, recently released the terms of reference for the review and intends to release an issues paper for public consultation in mid-2018, subject to Cabinet approval.
“Insurance plays an important role in the lives of New Zealanders, helping people cope with unforeseen life events and providing businesses with greater certainty,” said Faafoi.
“But 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.
“I have heard, for example, that consumers are sometimes not covered for losses or unable to claim for important needs like health treatment because they innocently did not disclose seemingly unrelated matters to the insurer,” he added.
He said this has the greatest impact on those who genuinely thought they met their requirements and so a focus on onerous disclosure requirements is of paramount importance.
According to the International Monetary Fund, New Zealand can improve in its regulation and supervision of insurer’s conduct and Faafoi says the review will also consider whether there is a case for this.
“Insurance contract law has been significantly updated in comparable markets including Australia and the UK, so this work is long overdue,” Faafoi explained.
“Reform is needed so that all New Zealanders have the protection of a well-functioning insurance market. The sector has been supportive of the need for a review so I am optimistic that stakeholders will be involved in order to make good progress swiftly.”
The terms of reference outline the review’s scope, process and an indicative timeline.
“I see this as an important piece of work so I am asking officials to move this forward quickly,” said Faafoi. “If I find that change is warranted I’ll be working towards introducing legislation in the current Parliamentary term.”