Commerce and Consumer Affairs Minister Kris Faafoi has released the terms of reference for a review of New Zealand insurance contract law, which he describes as long overdue.
He said: “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.
He added: “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,” he said.
Currently there are six Acts governing insurance contracts in New Zealand, two of which date back to 1908.
Meanwhile the Insurance Council of New Zealand (ICNZ), the industry's representative body, said they welcomed the review.
"We have set a very high bar for our members, which makes us feel very comfortable about any change which might occur in this area," ICNZ Chief Executive Tim Grafton said.
The Fair Insurance Code, an industry best practice standard, went further than current legislation to regulate ICNZ members' behaviour.