Modernised Insurance Laws to Bolster Consumer Protection and Market Stability

New legislation promises transparency and fairness for New Zealanders, putting the onus on insurers to communicate clearly and fairly assess policy claims, according to Commerce and Consumer Affairs Minister Andrew Bayly.

In a significant update to New Zealand's insurance landscape, Commerce and Consumer Affairs Minister Andrew Bayly announced that new insurance laws will strengthen consumer protection and transparency, ultimately ensuring that Kiwi consumers and businesses can trust their insurance providers. The recently passed Contracts of Insurance Bill and Contracts of Insurance (Repeals and Amendments) Bill introduce a range of consumer safeguards, designed to modernize the industry and offer greater clarity around insurance policy expectations.

"A secure insurance market is integral to New Zealand’s economic success. It enables consumers and businesses to access finance and gives them the assurance to grow and invest,” Minister Bayly stated. "With these updates, Kiwis can feel confident they will be treated fairly and transparently in their dealings with insurers."

One of the most notable reforms addresses the burden of disclosure, which previously required consumers to assess what information might be relevant to a "prudent insurer." This term often led to confusion and saw insurers voiding claims when customers inadvertently withheld information deemed relevant after the fact. Under the new law, however, the responsibility has shifted to insurers, who must now ask specific questions relevant to the policy. Consumers are then only required to answer those questions honestly, removing the onus from policyholders to guess what details might impact their coverage.

Further reforms emphasize that insurers must write policies in plain language so that policyholders clearly understand the terms and conditions. Insurers will also be expected to settle claims within a reasonable time frame, enhancing the reliability and responsiveness of the industry.

During the Bill's development, concerns around genetic testing and insurance emerged, especially in light of international cases where genetic test results have been used to limit coverage or adjust premiums. Bayly noted that while there is no indication this is a common practice in New Zealand, the legislation now includes provisions that enable the government to regulate the use of genetic test results in the future, if necessary.

"Genetic testing is a valuable, emerging technology that has significant potential to enhance health outcomes and productivity. This legislation safeguards Kiwis' access to health and life insurance if they have undergone genetic testing, ensuring that they can continue to access coverage without undue penalty," Bayly remarked.

The provisions on genetic testing align New Zealand more closely with international standards. In Canada, insurers are prohibited from accessing genetic information, and Australia recently announced it will restrict life insurers from using genetic testing results.

The legislation has undergone extensive consultation, with input from consumers, industry stakeholders, and experts, resulting in a balanced approach that enhances consumer protections while providing stability and clarity for insurers. "I am delighted that we have delivered on this promise. These updates will secure a fair, well-functioning insurance market, promoting trust between consumers and insurers alike," Bayly concluded.

These changes signal a new era of transparency, fairness, and consumer protection in New Zealand’s insurance market, positioning it as a stable and accessible foundation for both individual and economic resilience.