Insurance & Financial Services Ombudsman (IFSO) looks forward to updates in legislation regarding 'non-disclosure', and other news

Insurance & Financial Services Ombudsman (IFSO) Karen Stevens is looking forward to the Insurance Contracts Bill. The bill aims to update and consolidate NZ’s existing insurance laws and make insurance contracts easier to understand and fairer to consumers.

“As long as they don’t deliberately try and mislead the insurer by giving them wrong information or withholding information they know about, then they should not be penalised. At the moment, the law [is that] it doesn’t matter whether or not you innocently failed to disclose.”

Under the law in place at present, forgetting is enough to be denied compensation…. “If they actively mislead the insurer, then the insurer can respond by avoiding the policy or declining the claim. But if they don’t actively mislead the insurer, then the insurer can’t take that very harsh action that they currently do now.”

According to the ombudsman, over the years they have seen a lot of policyholders who have not actively tried to misrepresent the situation but have suffered the consequences of non-disclosure…. “That means that they’re uninsurable. As well as being uninsured, they’re uninsurable.” …

“Some insurance contract terms will be deemed to be unfair going forward, and I think that’s going to cause a degree of consternation to insurers in terms of looking at policies carefully and working out how that’s going to impact on the current policy documentation.”

“… the government has said that to help consumers better understand what their policy covers basically, they want them to be presented and worded clearly. So, the government’s thinking about how to regulate in that sort of space to make sure that they are easier to understand.”

We asked Karen Stevens to give examples of possibly unfair contract terms. Of course, this is difficult to do as a category, because ‘unfair’ will be judged in the courts in ways which can only ever be specific to a contract and a specific person. Having said that, what emerges from our discussion and some of the case examples provided is that blanket exclusions, for example, for mental health conditions; or all pre-existing conditions; or blanket provisions allowing an insurer to revise terms and conditions (such as changing the definitions for trauma or health conditions that define the threshold for payment) have been successfully challenged overseas, like the example here. Following our review of these issue in our last quarterly life report this suggests that it will be sellers of short-form underwritten contract that will probably have the most challenges in managing the transition required by the new law.

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Fidelity Life launches ‘Mark It’, a marketing and communications resource, and other news

Fidelity Life has launched Mark It, a marketing and communications resource to help advisers better connect with customers - includes how-to-guides, communication templates and educational content.

Mark it will include how-to-guides and communication templates designed for a range of customer life cycle scenarios, as well as educational content about different types of life insurance for customers’ changing ages and stages.

All Mark it content is written in plain English. New tools and content will be added over time, with the aim of helping advisers provide useful, educational content for customers.

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Government criticised for allocating funds to ACC to work on NZIIS before MBIE’s analysis of consultation on scheme released, and other news

Jenée Tibshraeny writes in NZ Herald of how the government has been critiqued for pushing through legislation to allow ACC to work towards operationalising the NZISS ahead of the Ministry of Business Innovation and Employment’s (MBIE) analysis of submissions made via the consultation process. MBIE has said a formal decision on whether the government will proceed with the scheme will be made in June or July.

MBIE's acting manager of income insurance policy, Francis van der Krogt, told NZ Herald around 2000 people or organisations either made full submissions or answered a shorter-form survey.

He said officials are analysing the feedback and preparing a summary for Ministers, which will be released "in due course".

Asked why the submissions weren't published before the legislation was passed and funding allocated via the Budget, van der Krogt noted the legislation is a "small and relatively technical piece of legislation" that enables ACC to do work it wouldn't otherwise be able to do under existing legislation.

"The work will help inform final decisions. Any substantive legislation to create a New Zealand Income Insurance scheme would go through a full Parliamentary process," van der Krogt said.

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Budget allocates $60 million to establishment of NZIIS and delays implementation to 2024, and other news

On 19 May Finance Minister Grant Robertson presented the Government’s Wellbeing Budget, allocating $60 million to support the continuing development of the New Zealand Income Insurance Scheme (NZIIS).

The amount will fund the Accident Compensation Corporation (ACC) to undertake preliminary work to establish the systems and operational processes for a new levy-funded income insurance scheme.

The proposed implementation has also been pushed back from 2023, with Robertson saying

“There is considerable work to get the scheme up and running, and it is now expected that it will be operational in 2024.”

Insurance Business spoke to Deloitte NZ tax partner Robyn Walker, who said

“The sensible decision to not rush this through means that the New Zealand Income Insurance Scheme may become a significant matter for voters to evaluate as we head into Election 2023.”

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And a bit of light humour from xkcd here

Legal and regulatory update for the life and health insurance sector

20 May 2022 – Under an extended Parliamentary session from 19 May 2022, the following Bills were passed through all their stages in Parliament under urgency.

  • Taxation (Cost of Living Payments) Bill

  • Income Insurance Scheme (Enabling Development) Bill

  • Companies Office Registers Funding Validation Bill