COMPLIANCE NEWS – INSURERS
JUNE ISSUE | 2021
This month has been a relatively quiet month for insurance news – a welcomed change from the recent busy months following the implementation of the Financial Services Legislation Amendment Act. This month our Bulletin outlines the implications of the cyber-attack on the Waikato DHB, the recent ACC case concerning asbestos claims, the allegations against AMP and the government’s announcement to implement an unemployment insurance scheme as part of the 2021 Budget. We also provide our general update on relevant legislation.
CYBER RISKS AND PRIVACY IMPLICATIONS
The Waikato District Health Board (DHB) suffered a cyber-attack last week causing major disruptions to their operations. The attack has been described as one of the biggest cyber-attacks in New Zealand’s history. The attack is said to be a ransomware attack and the individuals involved reportedly remain unknown. The DHB has refused to comment on the issue to avoid giving publicity to the attackers. They say the focus at the moment is to work to reduce the spread of the personal information stolen and ensure the hospitals are able to continue to provide care to their patients as much as possible.
When there is any breach of disclosure which could cause serious harm to an individual, the new Privacy Act 2020 requires the holder of that information to inform the Privacy Commissioner of the breach as well as the individual affected as soon as possible. This unfortunate event has proven that the update of our Privacy Act was needed to ensure individuals are aware of events where their personal information may be leaked to the public.
The DHB have concerns that the attackers could have had access to the system for weeks without the knowledge of the DHB. This highlights the importance of organisations undertaking continuous system checks to ensure it is free of disruption and that protective measures are up to date. Insurance companies specifically hold a vast amount of personal information which could have dire consequences if made public. It is therefore important that insurers turn their mind to any weaknesses within their privacy systems and processes for reporting privacy breaches.
ACC LOSES IN COURT OF APPEAL DECISION FOR ASBESTOS CLAIM
The Court of Appeal has released their decision on a claim for ACC for the asbestos related disease, mesothelioma. Deanna Trevarthen, who died in 2016 from mesothelioma (a cancer caused by the inhalation of asbestos particles) was exposed to asbestos particles whilst hugging her father, an electrician who would arrive home with asbestos contaminated work clothing.
Prior to her death, she had made an application to ACC, who denied her claim for reason it had not arisen from workplace exposure and was not an injury caused by a standalone accident. ACC argued they are entitled to refuse cover if the personal injury is caused wholly or substantially by a gradual disease or infection. The Court of Appeal, in a unanimous decision, found the condition was considered a personal injury which is covered under ACC. The Court found the inhalation of the asbestos particles was an accident which was the main cause of the personal injury, being the cancer.
This is a huge milestone in the law as it will likely set a precedent to allow other mesothelioma sufferers to lodge a claim under ACC where inhalation has not occurred in the workplace.
AMP SUED FOR INAPPROPRIATE PREMIUMS
Various AMP Listed companies, including AMP Life Limited are facing civil proceedings bought by the Australian Securities & Investments Commission (ASIC) for allegedly charging insurance premiums to more than 2,000 deceased customers. ASIC are alleging that the behaviour of the AMP companies’ was unconscionable. They allege that AMP deducted insurance premiums and financial advice fees despite being notified of the insured’s death. ASIC also allege that AMP failed to have a process in place to ensure they did not charge deceased customers. We will continue to provide updates on this case in the coming months.
UNEMPLOYMENT INSURANCE SCHEME
As part of the 2021 Budget released on the 20th of May, Finance Minister, Grant Robertson announced the Government’s plans to look at implementing an unemployment insurance scheme. The scheme has not yet reached the planning and design phase and is merely an idea, however, the government hopes the scheme will pay out 80 per cent of an individual’s wage in the event they are made unemployed. The scheme has been described as a replica of the ACC system but for sudden job losses.
The concept will ensure that someone who is suddenly made unemployed is able to meet their normal ongoing costs of living for a set period of time until they are able to find a new job or move into the welfare scheme. As finding a suitable job can take time, the Government hopes to reduce the financial burden on individuals to levitate the pressure to accept a lower-paid job which doesn’t match their skill-sets.
Financial Markets (Conduct of Institutions) Amendment Bill
The Finance and Expenditure Select Committee reported on the Financial Markets (Conduct of Institutions) Amendment Bill on 7 August. The Bill now awaits its second reading.
Insurance (Prompt Settlement of Claims for Uninhabitable Residential Property) Bill
The Select Committee of the Insurance (Prompt Settlement of Claims for Uninhabitable Residential Property) Bill finished accepting submissions on 18 March. The Bill now awaits its second reading.
Fair Trading Amendment Bill
The Fair Trading Amendment Bill passed its first reading on 12 February 2020. The Economic Development, Science, and Innovation Committee is considering the Bill. Submissions closed on 26 April 2020. The Committee’s report was due on 12 August 2020 but is yet to be released.
Insurance Contract Law Review
The exposure draft Bill for consultation is anticipated to be released mid-2021.
Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill
The Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill is currently with the Select Committee and will be accepting submissions until 28 May 2021.
Disclaimer: The information contained in this newsletter is provided for general purposes only, and should not be construed as legal advice on any matter.
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Laura Sookahet/Senior Associate
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Andrew Goble/Senior Solicitor
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Stacey Craig/Law Clerk
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