COMPLIANCE NEWS – INSURERS
ISSUE MARCH | 2022
Insurance Contracts Bill
The Ministry of Business, Innovation and Employment (MBIE) released the long-awaited consultation draft of the Insurance Contracts Bill (the Bill) at the end of last month. MBIE began the comprehensive review of New Zealand’s insurance contract law in 2018.
Currently, the law of insurance in New Zealand is derived from a complex hybrid of common law and various statutes, some of which date back to 1908. The Bill seeks to repeal the following statutes and replace them with a singular modernised statute (proposed as the Insurance Contracts Act 2022):
- the Life Insurance Act 1908
- Part 3 of the Law Reform Act 1936
- the Insurance Law Reform Act 1977
- the Insurance Law Reform Act 1985
- the Insurance Intermediaries Act 1994
The Bill also seeks to codify some aspects of the common law, including a statutory recognition of the duty of utmost good faith. Importantly, the Bill will apply broadly to a “contract of insurance” which encompasses both general and life insurance providers and reinsurers.
We note the following key aspects of the Bill:
- repealing of the above statutes;
- significant reforms to the duty of disclosure, which would impose a different standard of disclosure depending on whether the contract of insurance is a “consumer insurance contract” or not;
- codifying the remedies that are available to an insurer for material non-disclosure/misrepresentation;
- placing the responsibility on insurers to ask the right questions of the consumer, rather than the responsibility laying with the consumer;
- new mechanisms for third party claims against insurers;
- new provisions for assignment of life policies, and amendments to life insurance of minors;
- requiring insurance policies to be written and presented clearly in accordance with a prescribed format. This includes the requirement to publish certain information to support consumers in comparing insurers and insurance policies
- proposed amendments to the unfair contract terms provisions in the Fair Trading Act 1986
The MBIE consultation page can be found here. Submissions close at 5pm on 4 May 2022. Please get in contact with Mahony Horner Lawyers’ insurance team if you have any questions related to how the Bill may affect your business or if you intend to make a submission on the Bill.
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 Contract Law Review
The Ministry of Business, Innovation and Employment (MBIE) released the draft Insurance Contracts Bill on 24 February 2022. MBIE is currently seeking feedback on the draft Bill. Submissions can be made on MBIE’s website. Submissions close 4 May 2022..
Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill
The Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill received royal assent on the 27th of October. The final standard is expected to be released in December 2022.
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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