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Government to conduct review of insurance contract law

06 March 2018

The Minister of Commerce and Consumer Affairs has announced a review of New Zealand’s insurance contract law, and released the terms of reference for the review.

The terms of reference outline the scope and proposed timeframe for the review.

The minister, Kris Faafoi, says the review will examine a range of issues with insurance contract law, including those relating to:

  • Disclosure obligations for policyholders,
  • Technical issues that have been identified by the Law Commission and insurance industry,
  • Gaps in New Zealand’s regulation of insurers’ conduct,
  • The scope of terms defined to be not “unfair contract terms” under the Fair Trading Act 1986,
  • Consumers’ ability to find and compare prices and policies.

The Ministry of Business, Innovation and Employment (MBIE) is preparing an issues paper which is planned for release and public consultation in mid-2018. The issues paper will be an opportunity for interested parties to share their views and insights about the issues that have been identified for the review.

Mr Faafoi says there are “significant problems” with insurance contract law which are undermining the effectiveness of the insurance markets and impacting on 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 says.

“This is really tough for people who genuinely believe they have met their requirements and are later unable to rely on benefits of insurance. So onerous disclosure requirements are one of the issues I am keen to look at.”

Mr Faafoi says the review will also consider whether there is a case for greater regulation and supervision of insurer’s conduct.

“Insurance contract law has been significantly updated in comparable markets including Australia and the UK, so this work is long overdue.”

“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,” Mr Faafoi says.

Last updated on the 6th March 2018