On 6 March 2018, the New Zealand Minister of Commerce and Consumer Affairs released the terms of reference for a review of New Zealand insurance contract law.

The Minister referred to insurance contract law reform in comparable markets, including Australia and the UK, and said that this work is long overdue. He stated that: “there are significant problems with New Zealand’s insurance contract law which are undermining the effectiveness of our insurance markets and impacting those who do not receive the support they anticipated from their insurance policies.”

The terms of reference for the review state that New Zealand’s insurance contract law is antiquated and fragmented (since there are six Acts governing insurance contracts in New Zealand, two of which date back to 1908) and outline an intention to modernise New Zealand’s insurance contract law and consolidate it into one Act.

The terms of reference outline the scope, process and an indicative timeline for the review. The review will examine a range of issues with insurance contract law, including those relating to:

  • disclosure obligations for policyholders;
  • technical issues that have been identified by the Law Commission and insurance industry;
  • regulation and supervision of insurers’ conduct (the International Monetary Fund has identified that New Zealand has room for improvement in this area);
  • the scope of terms defined to be not “unfair contract terms” under the Fair Trading Act 1986; and
  • consumers’ ability to find and compare prices and policies.

The following areas are outside of the scope for the review:

  • underinsurance;
  • competition issues related to the structure of insurance markets;
  • prudential regulation of insurers;
  • earthquake insurance;
  • accident compensation insurance as governed by the Accident Compensation Act 2001; and
  • regulation of financial advisers, and the dispute resolution regime in relation to insurance.

The Ministry of Business, Innovation and Employment is preparing an issues paper which is planned for release and public consultation in mid-2018. The issues paper will be an opportunity for interested parties to share their views and insights about the issues that have been identified for the review.

Following this, the proposed timeline and process is:

  • Late 2018: release of an options paper for consultation
  • Mid 2019: policy decisions to be made and, if warranted, followed by a legislative process.