Fishhooks for insurers in draft Insurance Contracts Bill

Market-watchers describe the Insurance Contracts Bill as a game-changer, warning of potential premium hikes and less availability of consumer insurance cover as insurers try to figure out what the changes will mean so they can recalculate their risk.

Lloyd Kavanagh, a partner at law firm MinterEllison Rudd Watts and a financial services specialist, describes the draft Bill as a ‘big deal’, saying it will have a profound impact on the entire insurance sector.

“If it’s passed largely in its current form, which we have every belief it will be, it’s going to make fundamental changes to duties of disclosure, it will introduce unfair contracts terms and regulation to insurance for the first time, it’s going to have a whole lot of requirements about the way consumer insurance contracts are presented and it will consolidate a raft of itsy bitsy legal reform going back to the 1930s,” Kavanagh says. “It shifts the power away from the insurer to the insured.”

The legislation will cover the entire licensed insurance industry – life, health, general and travel. It repeals five statutes, pulling New Zealand’s fragmented insurance law together into one Bill and bringing our insurance contract law into line with Australia and the United Kingdom.