Commerce and Consumer Affairs Minister Andrew Bayly says he has consulted with the sector on the bill. Photo: RNZ / Samuel Rillstone
A bill intending to modernise insurance law has passed its first reading at Parliament.
The Contracts of Insurance legislation would shift the onus of disclosure duties to insurers.
In a statement, Commerce and Consumer Affairs Minister Andrew Bayly said currently, insurers could void insurance and refuse all claims if customers had not made adequate disclosures.
"These reforms are long overdue. New Zealand's insurance law is complicated and dated, some of which is more than 100 years old. The recent extreme weather events show just how important a well-functioning insurance system is and it's about time we brought insurance law into the 21st century," he said.
While customers will now be expected to take reasonable care not to make a misrepresentation, it will be up to insurers to ask the relevant questions, using simple terms.
Insurers will also have to make payments within a reasonable timeframe.
"I have consulted with industry to make sure this Bill balances customer protection with providing certainty for the market. In a cost-of-living crisis, we are acutely aware of the need to keep insurance premiums to a minimum," Bayly said.
"This bill moderates the cost of insurance by maintaining things that are working well. The last thing I want is to introduce risk and uncertainty, which would drive up insurance premiums and ultimately harm everyday Kiwis.
Opposition parties agreed to support the bill to Select Committee - though Labour said a clear definition of "reasonable timeframe" will be needed.
Insurance Council of New Zealand (ICNZ) chief executive Kris Faafoi said the overhaul was well overdue.
"The current legislation is widely acknowledged to be outdated, unwieldy and not fit for purpose in today's world. The new Bill will help tidy up, rationalise and update New Zealand's insurance law into a single framework to support well-functioning insurance markets for both insurers and consumers."
However, Faafoi also acknowledged there was work to do as the industry worked through the details of the bill to ensure a balance between consumer protection and fairness in the sector.
"Given the sheer scale of the reforms, it's also important that sufficient time is allowed for the industry to implement and bed in the changes once they are known. We are pleased to see that the minister has allowed up to three years.
"The sector will work closely with the government and regulators to ensure that the Bill and other regulatory reforms that the industry is facing are done in a co-ordinated way that benefit both consumers and the industry as whole."
Bayly said he wanted to have the bill pass by the end of the year and looked forward to the Select Committee process and submissions from the public.