Release: Insurance Contracts Bill to overhaul insurance law
A Member’s Bill drawn this week would modernise insurance law and make things fairer and more transparent for consumers, Christchurch Central MP Duncan Webb said.
“As a former insurance lawyer, I know from bitter experience that the current law did not serve consumers,” Duncan Webb said.
“This Insurance Contracts Bill will require insurance contract terms to be both clear and fair.”
A key change was policyholders who made an honest mistake would not find themselves without cover as a result. It would also introduce penalties for insurers who failed to act in good faith, such as not completing a claim in a timely manner.
“Consumers would be expected to take reasonable care and not misrepresent risk, however it is often the case that they don’t fully understand the terms of their insurance policies,” Duncan Webb said.
“To help people understand and choose the most appropriate cover, the Bill requires that polices be clearer and in plain language.
“The rules would also be adjusted for non-consumer contracts (mainly businesses) to ensure the risks were presented fairly by policyholders. Remedies for misrepresentations would also be more proportionate.
“This Bill addresses issues that have been raised for years by both the industry and consumer groups,” Duncan Webb said.
Webb said while the Fair Trading Act 1986 prohibited unfair terms in standard consumer contracts, there had long been concerns that insurance exceptions within that Act meant inferior protections for insurance policyholders.
This Bill largely removes the insurance exceptions. Some which are consistent with general law will remain. It also addresses some other technical issues of insurance law.
“Effective insurance law is essential for a well-functioning market to cope with unforeseen events. Given what we have seen with recent and increasing major events as a result of climate change, these changes can’t come quick enough.”
“The Bill builds on existing Government work and I am optimistic the Government will support it,” Duncan Webb said.
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