Insurance contract law review starts

Commerce and Consumer Affairs Minister Kris Faafoi has today released the terms of reference for a review of New Zealand insurance contract law.

 “Insurance plays an important role in the lives of New Zealanders, helping people cope with unforeseen life events and providing businesses with greater certainty.

 “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.

 “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. The International Monetary Fund has identified that New Zealand has room for improvement in this area.

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

 “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. With Cabinet approval I hope to release an issues paper for public consultation in mid-2018. If I find that change is warranted I’ll be working towards introducing legislation in the current Parliamentary term,” says Mr Faafoi.

 More information on the review of insurance contract law is available here.