Andrew Bayly said the bill aims to move the onus from the individual to the insurer in relation to medical history disclosures. Photo: RNZ / Samuel Rillstone
The Minister for Commerce and Consumer Affairs says insurance laws are too complicated and change is long overdue.
A bill intending to modernise insurance law has passed its first reading at Parliament on Thursday.
The Contracts of Insurance legislation would shift the onus of disclosure duties to insurers.
"The obligation now rests with the insurance company" - Andrew Bayly
Minister Andrew Bayly told Morning Report that it was often difficult when filling out insurance policy to know what level of information was required.
He said that the onus had always been on the individual rather than the insurance company.
"We've shifted the onus to the insurance company, they have to ask the right questions.
"For example, someone had a heart attack and hadn't disclosed that they'd had a sore hip, and on that basis the claim was declined.
"You can't just say 'tell us your medical history' and it's up to you to guess what you should be putting in."
This was one area that Bayly said the new bill would change, and the obligation would rest with the insurance company, not the individual.
Insurance contracts needed to be simplified to make them easier to understand and insurance policies should be written in clear language to make it easy to compare policies, Bayly said.
He also wanted insurers to pay out claims quickly.
"At the moment there was no express requirement for the insurance company to pay out quickly."
Bayly said he had worked with the insurance industry over the past few months, and that they sought some changes in the bill, some of which have been agreed to.
The ultimate outcome was to make sure insurance costs did not go up unnecessarily and that there was much more clarity for the consumer, Bayly said.
Some of the current legislation is over 100 years old, and the new bill aims to modernise insurance law within three years.
"It's not necessarily all of it that's going to take three years, there will be elements that come through pretty quickly," Bayly said.