Move to Modernise Insurance Law


A Member’s Bill drawn this week could modernise insurance law and make things fairer and more transparent for consumers says Labour Party MP Duncan Webb.

The former insurance lawyer says his Insurance Contracts Bill will require “…insurance contract terms to be both clear and fair”.

A key part of the Bill would mean policyholders who made an honest mistake would not find themselves without cover as a result. It would also introduce penalties for insurers who failed to act in good faith, such as not completing a claim in a timely manner.

“Consumers would be expected to take reasonable care and not misrepresent risk,” says Webb. “However, it is often the case that they don’t fully understand the terms of their insurance policies.

Labour MP Duncan Webb.
Duncan Webb MP.

“To help people understand and choose the most appropriate cover, the Bill requires that polices be clearer and in plain language.

“The rules would also be adjusted for non-consumer contracts (mainly businesses) to ensure the risks were presented fairly by policyholders. Remedies for misrepresentations would also be more proportionate.”

Webb says the Bill addresses issues that have been raised for years by both the industry and consumer groups.

…I am optimistic the Government will support it…

The Christchurch Central MP says that while the Fair Trading Act 1986 prohibited unfair terms in standard consumer contracts, there had “…long been concerns that insurance exceptions within that Act meant inferior protections for insurance policyholders”.

This Bill largely removes the insurance exceptions. Some which are consistent with general law will remain. It also addresses some other technical issues of insurance law.

“The Bill builds on existing Government work and I am optimistic the Government will support it,” Webb said.

Below: Duncan Webb interviewed by RNZ about his member’s bill on 15 April 2024.