Modern insurance law will protect Kiwi households

The coalition Government is modernising insurance law to better protect Kiwis and provide security in the event of a disaster.

These reforms are long overdue. New Zealand’s insurance law is complicated, being currently spread across a mix of case law and various pieces of legislation, some over 100 years old. My new Bill provides one coherent package that aligns with international standards.

Recent extreme weather events show just how important a well-functioning and secure insurance system is to our financial wellbeing.

The Contracts of Insurance Bill, which had its first reading in Parliament on 2 May, will simplify the insurance system and give Kiwis peace of mind that when disaster strikes, their insurer will provide quick and fair compensation.

The Bill makes a really positive change for consumers. Right now, consumers must disclose everything that might be relevant to an insurance policy. But it’s difficult for everyday Kiwis to know what information is relevant.

Under this Bill, there will be no more guesswork for consumers. It will be insurers’ responsibility to ask the right questions, which will reduce insurers’ ability to void cover or refuse to pay claims.

Going forward, insurers must use simple terms to make insurance policies easier to understand, and it must be easier for consumers to compare policies. Insurers must disclose whether they are likely to access third party information, such as medical records, and when. They will also have to pay customers within a reasonable timeframe.

These are big wins for consumers who currently face a complicated and unwieldy process.

I have consulted with industry to make sure this Bill balances customer protection with providing certainty for the market. In a cost-of-living crisis, we are acutely aware of the need to keep insurance premiums to a minimum.

I intend to pass this Bill by the end of the year and look forward to the Select Committee process and submissions from the public.