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The Government has announced the start of a public consultation on New Zealand’s insurance contract law, and is taking ‘the next step to improve customer protections.’
Commerce and consumer affairs minister Kris Faafoi says the need for greater regulation of insurer conduct is the key issue being called into question.
“Insurance plays an important role in the lives of New Zealanders, helping us cope with unforeseen life events and providing businesses with greater certainty,” states Faafoi. “A well-functioning insurance system, where all parties can transact fairly and with confidence, is vital to ensure insurance continues to serve all New Zealanders.”
According to Faafoi, much of New Zealand’s insurance law is now outdated, with some parts of it being more than 100 years old and spanning six different Acts. There are also ‘significant issues’ within the legislation that undermine the effectiveness and integrity of insurance markets and result in customers not receiving the support they anticipate at claim time.
These issues include the arduous nature of disclosure obligations on customers, along with technical issues that insurers claim make it difficult for them to price risk.
“We’re getting a lot of feedback around the disclosure issue from the consumer end,” Faafoi explains. “There is some concern around the regulatory systems and oversight when it comes to the claims process, which is something both industry participants and consumer groups are quite keen to see updated.”
“There have been instances of non-disclosure where customers have signed up to policies which resulted in their claims being only partially dealt with, or pushed back altogether. This is really tough for people who genuinely believe they have met their requirements and are later unable to rely on the benefits of insurance. So onerous disclosure requirements are one of the issues we need to consider, and I hope, an issue that will be addressed in feedback from submitters.”
Faafoi points to claimant’s experiences following the Christchurch earthquakes along with issues highlighted in Australia’s Royal Commission as signs that greater regulation of insurer conduct is required.
“Insurance affects nearly everyone, so I encourage everyone with an insurance story to let us have their views,” he continues.
“The industry has the opportunity to have a hard look at some of the things being discussed, and to proactively deal with these issues.”
