Praneeta Mahajan
Hamilton, May 3, 2024
In a bid to fortify the financial security of New Zealanders and streamline the insurance landscape in the nation, Commerce and Consumer Affairs Minister Andrew Bayly unveiled ambitious reforms yesterday, on May 2, 2024.
The proposed changes, encapsulated in the Contracts of Insurance Bill, mark a significant step towards modernizing antiquated insurance statutes dating back over a century.
Mr Bayly, in addressing the media, emphasised the timeliness of the overhaul. “These reforms are long overdue,” he asserted. “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 is about time we brought insurance law into the 21st century.”
Simplifying the framework
The cornerstone of the proposed legislation revolves around simplifying the insurance framework to provide Kiwis with expedited and equitable compensation in times of crisis. Under the proposed reforms, the onus of disclosure duties would shift from consumers to insurers, alleviating the burden on everyday citizens to navigate complex policy requirements.
Minister Bayly articulated the benefits of this paradigm shift and said, “There will be no more guesswork for consumers. It will be insurers’ responsibility to ask the right questions, which will reduce insurers’ ability to void cover or refuse to pay claims.”
Reducing technicalities
The Bill also mandates insurers to employ straightforward language in policy documents, ensuring greater comprehension among policyholders.
Additionally, stringent timelines for claims processing aim to expedite payouts, offering relief to individuals grappling with the protracted and convoluted claims adjudication process.
Throughout the legislative development process, Mr Bayly underscored the importance of striking a delicate balance between consumer protection and market stability. “I have consulted with industry to make sure this Bill balances customer protection with providing certainty for the market,” he said.
Reducing strain on households
Recognising the imperative to mitigate the financial strain on households, Mr Bayly assured that the reforms would not exacerbate the affordability crisis. “In a cost-of-living crisis, we are acutely aware of the need to keep insurance premiums to a minimum,” he remarked. “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.”
With a commitment to expeditious implementation, Minister Bayly outlined his intention to shepherd the Bill through the legislative process by year’s end. “I intend to pass this Bill by the end of the year and look forward to the Select Committee process and submissions from the public,” he concluded, signalling a collaborative approach to reform implementation.
Praneeta Mahajan is an Indian Newslink reporter based in Hamilton.
