Many stakeholders are urging for crucial revisions to enhance clarity and confidence among all parties involved. Presented by Minister of Commerce and Consumer Affairs Andrew Bayly, the Bill aims to modernise insurance contract law, a process initiated back in 2019 under the previous Labour-led government.
During a recent public hearing before the Finance and Expenditure Committee, representatives from key industry bodies such as the Insurance Brokers Association of New Zealand (IBANZ), Financial Advice NZ, and major insurer IAG voiced their concerns and recommendations. The overarching sentiment was one of cautious support tempered by calls for specific amendments.
IBANZ Chief Executive Melanie Gorham highlighted a perceived advantage for insurers under the current Bill, questioning its effectiveness in promoting informed participation by policyholders and brokers alike. This sentiment was echoed by Tim Williams from Chapman Tripp, who emphasised the potential confusion consumers might face if the Bill’s language remains unclear, particularly regarding penalties for non-payment, which he deemed unusual.
Financial Advice NZ, while broadly supportive, urged the committee to broaden the definition of consumer contracts to include life, health, and disability policies. According to their representatives, simplifying the complex insurance contract navigation process could encourage more families and businesses to secure adequate coverage.
IAG, a major player in the insurance market, expressed fundamental support for the Bill while stressing the necessity of amendments before its enactment. Executive Corporate Relations Manager Bryce Davies emphasised the critical role of insurance contracts in underpinning market stability and economic function. He cautioned that poorly designed reforms could introduce uncertainty, complexity, and increased litigation risks between insurers and customers.
One of the most contentious issues raised during the hearing was the use of genetic information in insurance decisions. Professor Andrew Shelling from Against Genetic Discrimination Aotearoa passionately advocated for prohibiting insurers from using genetic results to deny coverage or adjust premiums, aligning New Zealand with international standards.
The timeline for implementing the Bill also sparked debate, with IAG requesting a two-year transition period for insurers to adapt to the new regulatory framework. This request, aimed at ensuring compliance without disrupting market operations, faced scrutiny from committee members questioning the necessity of such a lengthy adjustment period.
The Bill’s journey from inception to its current state has been marked by delays and political transitions. Initially proposed by the Labour government, the reform process stalled during consultations and was left unresolved following the 2023 election, which saw a change in government.
Minister Bayly expressed perplexity over the prolonged delay in advancing insurance law reforms, emphasising the industry’s critical importance to both individuals and businesses in New Zealand. He underscored the need for a balanced approach that addresses industry concerns while safeguarding consumer interests and promoting economic stability.
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