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Govt reveals plans to change insurance rules

The onus of disclosure will shift to insurers under new rules revealed for the insurance sector.

Wednesday, December 4th 2019, 6:37AM

Commerce Minister Kris Faafoi has revealed the changes the Government plans to make as a result of its review of insurance contract law.

Submissions were sought earlier this year. The Government was concerned about issues of disclosure, how easy it was to understand and read policies, and unfair contract terms.

“Insurance is vitally important in supporting consumers and businesses to be financially resilient when unexpected events happen,” Faafoi said.

“The current law is outdated, and many insurance policies are complex and difficult to follow. This means consumers can be buying insurance products they don’t understand, which can be poorly suited to their needs, and can leave them in the dark about what they should disclose to their insurer."

Changes the Government has agreed on include placing the responsibility on insurers to ask consumers the right questions when processing new insurance policies, rather than leaving it to consumers to know what to tell the insurer.

Policies will have to be written and presented clearly, so that consumers can easily understand them.

Insurers will need to respond proportionately when consumers don’t disclose something they should have, or misrepresent themselves.

There will also be stronger protections for consumers against unfair terms in insurance contracts.

The Financial Markets Authority will be given extended powers to monitor and enforce compliance with new requirements.

“All New Zealanders deserve the assurance that when they claim for losses, their policy will provide the cover they expected. However, longstanding issues with insurance contract law have been undermining the benefits of being insured," Faafoi said.

“These measures will complement decisions the Government made earlier this year requiring insurers and other financial service providers to treat their customers fairly.

“It’s about ensuring financial products and services are appropriate for consumers to use and properly meet their needs.

“We want to be sure we’ve landed on solutions that will work in practice, so we expect to consult with the public next year on draft legislation before any changes come into effect."

Tags: Disclosure insurance Kris Faafoi

« Ballantyne: Advisers don't own clientsProposed changes should help industry, insurers say »

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