Sunday, May 19, 2024

New insurance law to better protect Kiwi households

The Government is modernising insurance law to better protect Kiwis and provide security in the event of a disaster, Commerce and Consumer Affairs Minister, Andrew Bayly, announced today.

The Minister says the reforms are long overdue.

“New Zealand’s insurance law is complicated and dated, some of which is more than 100 years old. The recent extreme weather events show just how important a well-functioning insurance system is and it’s about time we brought insurance law into the 21st century,” he said.

“A secure insurance market is integral to our financial wellbeing and is part of this coalition Government’s mission to rebuild the economy.”

The Minister says the Contracts of Insurance Bill, which had its first reading today, will simplify the insurance system and give Kiwis, who diligently pay their insurance premiums, peace of mind that when disaster strikes their insurer will provide quick and fair compensation.

“We have all heard stories of people being denied compensation because they didn’t realise they had to disclose certain information, or waiting months on end in limbo while they wait for a decision from their insurer. This isn’t fair or right.”

“The Bill makes a really positive change for consumers by shifting the onus of disclosure duties to insurers. 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. 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,” said Mr Bayly.

The Minister said he has consulted with industry to make sure the 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,” he said.

“This Bill moderates the cost of insurance by maintaining things that are working well. The last thing I want is to introduce risk and uncertainty, which would drive up insurance premiums and ultimately harm everyday Kiwis.

“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,” Mr Bayly said.

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