The Insurance Council of New Zealand (ICNZ) has welcomed the passage of the Contracts of Insurance Bill, legislation that aims to update and unify the country’s insurance laws.
The bill, which completed its third reading in Parliament, seeks to provide stronger consumer protections while offering greater clarity and stability for insurers operating in New Zealand.
In a statement, ICNZ chief executive Kris Faafoi said that the bill provides much-needed reform in the insurance sector.
“The new legislation tidies up New Zealand’s mishmash of outdated insurance laws into a single framework to support well-functioning insurance markets. It also brings New Zealand in line with international best practice,” he said.
The ICNZ affirmed its commitment to working closely with government agencies and regulators to ensure the changes are implemented in a coordinated manner, with realistic timelines that serve both consumer and industry interests.
“We are focused on getting on with the job and ensuring there is clarity and certainty for consumers and insurers parties for the long term. A sound and sustainable insurance market is essential to building a stronger economy and support the financial and economic wellbeing of New Zealanders,” Faafoi said.
The Contracts of Insurance Bill, introduced by Commerce and Consumer Affairs Minister Andrew Bayly, is part of a broader governmental push to modernise New Zealand’s insurance regulations.
The new regulations will make insurance contracts more accessible for policyholders by clarifying disclosure obligations.
Under the updated rules, insurers must take on greater responsibility for ensuring consumers understand these requirements, helping prevent claim disputes related to policy misunderstandings.
Bayly said in a previous statement that the bill’s primary goal is to improve fairness for consumers, shifting the onus of complex disclosures away from policyholders.
The ICNZ highlighted that insurers will have up to three years to adjust their internal systems to meet the new legal requirements.
Faafoi said that this transition period is essential, given the significant operational changes involved.
“Insurers have up to three years before the legislation comes into effect, and updating their systems and procedures in that time will be a mammoth task while also running their everyday operations and complying with their regulatory obligations,” he said.
New Zealand’s Finance and Expenditure Committee reviewed the bill and proposed several key amendments to refine its approach to consumer protections.
One recommendation redefines the handling of dishonest disclosures, suggesting that unintentional omissions should be seen as a lack of reasonable care rather than outright fraud.
Another amendment clarifies that insurers should be given adequate time to gather information before making payment decisions on claims.
Additionally, the committee discussed the use of genetic information in underwriting, with the majority supporting a less restrictive approach.
The Insurance & Financial Services Ombudsman (IFSO), Karen Stevens, also expressed her support for the reforms.
She highlighted the importance of ensuring fairness in insurance policies, particularly around disclosure requirements and contract language.
“I’m pleased that it’s finally on the table, as it’s been 26 years of waiting for the law to be changed,” she said in a previous statement.
The IFSO Scheme, which has handled over 80,000 complaints since it began in 1995, is optimistic that the updated laws will reduce the volume of disputes related to ambiguous contract terms.
The Contracts of Insurance Bill is expected to become law by the end of the year, with government officials targeting 2024 for the full implementation of its provisions.
Once in force, the legislation is anticipated to improve both the efficiency of the claims process and the clarity of insurance policies for consumers, bringing New Zealand’s insurance sector closer in line with modern international standards.
