The new law shifts the burden of responsibility for information disclosure onto insurers
New Zealand’s insurance industry is set to undergo significant changes following the passage of the Contracts of Insurance Bill and the Contracts of Insurance (Repeals and Amendments) Bill in Parliament.
Commerce and Consumer Affairs Minister Andrew Bayly announced that the updated legislation would provide New Zealanders with greater confidence and fairness in their dealings with insurance providers.
“A secure insurance market is integral to New Zealand’s economic success. It enables consumers and businesses to access finance and gives them the assurance to grow and invest,” said Bayly in a statement.
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The legislation introduces several key safeguards for consumers, including shifting the burden of responsibility for information disclosure onto insurers. Under the outdated law, consumers were required to disclose all information that might influence a "prudent insurer," a concept Bayly described as poorly understood by many and often leading to rejected claims for accidental non-disclosure.
“Now, the onus is on insurers to ask the right questions, and consumers must simply provide honest answers,” Bayly explained.
The reforms also mandate insurers to draft policies in plain language and ensure claims are processed within a reasonable timeframe. These changes aim to enhance transparency and fairness in an industry often criticised for its complexity.
In addition, the legislation addresses emerging concerns over genetic testing. To protect access to life and health insurance, the bills include provisions allowing the government to regulate the use of genetic test results by insurers, if necessary.
“Genetic testing is a valuable, emerging technology that can unlock significant health and productivity benefits. However, there are international examples of insurers limiting cover or increasing premiums due to genetic testing results,” Bayly said.
While such practices are not widespread in New Zealand, the new measures bring the country in line with international partners like Canada and Australia, which have implemented or announced restrictions on insurers’ use of genetic test results.
Bayly emphasized that the bills were shaped through extensive consultation to balance consumer protection with market certainty. “I am delighted that we have delivered on our promise to ensure the viability of a fair and well-functioning insurance market,” he said.