Olly Peers agrees insurance overhaul is long overdue but believes the consumer benefits aren’t assured, and other news
The Insurance Contracts Bill will repeal, replace and consolidate several Acts governing NZ’s insurance law. Olly Peers, partner at Buddle Findlay, believes care needs to be taken to ensure the Bill doesn’t make the insurance process more difficult for customers to navigate.
…the Bill proposes replacing the common law duty of disclosure with a new statutory duty. Consumers would be required to take reasonable care not to make a misrepresentation to the insurer. In effect, an applicant for insurance will need to answer any questions put by the insurer truthfully and accurately but will no longer need to determine for themselves what information may be material to the judgment of the insurer. No longer will there be an obligation to volunteer information not requested.
…One of the specific matters to be considered in determining whether the policyholder has taken reasonable care is the questions asked of the policyholder, namely were they clear and specific? If an insurer has asked vague questions, they will have less cause to complain about vague or general answers. In addition, an insurer will have a general obligation to communicate to the policyholder the importance of answering questions in a fair and accurate way.
For the legislation enacted in the UK, industry participants were concerned that the new statutory standard might promote excessively detailed questions and application forms, as insurers try to mitigate their risks. While the UK market appears to have regulated itself against the excesses of this practice, it is always worth bearing in mind the wider commercial impacts of legislative and regulatory reform. The unexpected consequences of recent changes to bank lending rules are a timely example of how well-meaning reform can have adverse rebound consequences.
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