March 2022


Legislative changes ‘on track’

NZILA President’s message – Kavita Deobhakta

While the global pandemic continues to provide the New Zealand Government with a multitude of challenges, major legislative change affecting the insurance industry still appears to be on track.   

New Zealand continues to work towards reviewing its insurance contract law. It has been long overdue, and NZ remains one of the last jurisdictions not to have ‘self-contained’ insurance legislation. It remains without doubt that the current law, in some respects, does not adequately assist the industry.

The NZ Government considers effective regulation of insurance contracts is important so consumers, businesses and insurers can transact with confidence in a fair, efficient, transparent way. Over the past three years it has identified and refined the areas in which change needs to occur.   

The initial policy decision to reform insurance contract law occurred back in November 2019.

By way of recap, the reforms included:
1. Putting the responsibility on insurers to ask customers the right questions when processing new policies, rather than leaving it to consumers to know what to tell their insurer (law of nondisclosure).
2. Requiring policies to be written and presented clearly, so consumers can easily understand them. 
3. Ensuring insurers respond proportionately when consumers do not disclose something they should have or misrepresent themselves.
4. Strengthening protections for consumers against unfair terms in insurance contracts.
5. Extending powers to the Financial Markets Authority to monitor and enforce compliance with the new requirements.

Since 2019, the review process is still in progress. The actual legislative reform is still some time away. The proposals and reforms are intended to be implemented through a Bill that consolidates insurance legislation into one Act and modifies the financial markets legislation and consumer laws, such as the Fair Trading Act.
The NZ Government has identified that its next steps for the review will include the release of a draft Bill for consultation, which it says is due “in early 2022”. At the time of writing, in February 2022, a precise date has not been communicated.   

While submissions on the proposed reforms have been sought and have now closed, publication of submissions on the options paper has not occurred. These will be received with great interest as the industry moves towards a more cogent and possibly codified legal framework.     

Back to top

Resolve is the official publication of the Australian Insurance Law Association and
the New Zealand Insurance Law Association.