New Fair Insurance Code Sets High Benchmark

media release

4 February 2015

New Fair Insurance Code Sets High Benchmark For General Insurance Industry Self-Regulation

The general insurance industry is to impose higher standards on itself when servicing consumers and small to medium-sized enterprises, the Insurance Council of New Zealand announced today.

“These new standards come in a new Fair Insurance Code that members of the Insurance Council must comply with. They will set a high benchmark for self-regulation, so the public can have trust and confidence in their dealings with our members,” says Insurance Council of New Zealand (ICNZ) Chief Executive Tim Grafton.

“For the first time, insurers will need to meet minimum timeframes for responding to the public when claims are made and keep them informed about the progress of their claim,” he said.

The revised Code, which will come into effect on 1 January 2016, commits ICNZ members to higher standards of service in all their dealings, not just with respect to claims.

“There will be independent scrutiny of breaches of the Code, with a focus on putting things right for the insured and sanctions for significant breaches. The number of breaches will be reported publicly to add a further level of accountability,” he said.

Key changes to the new Code include:

• Enhanced, effective communication with the insured, particularly concerning up-front disclosure of key information;

• Insurers committing to act reasonably when faced with the non-disclosure of relevant information by the insured;

• Introduction of best-practice timeframes for communicating with the insured at claim time;

• Insurers will train their staff and agents about the Code so they can fulfil their responsibilities as well.

The new Code also sees the establishment of a Code Compliance Committee, comprising a majority of independent experts, charged with investigating significant breaches of the Code.

Sanctions for such breaches will range from a fine to expulsion from the ICNZ.

“The new Code has also addressed issues that arose from the Canterbury earthquake experience as the previous Code didn’t take into account catastrophe situations and didn’t set out any timeframes for responding to claimants or keeping them informed of the progress of their claims,” said Mr Grafton.

“Insurers in Canterbury took the initiative to establish a vulnerability index to prioritise the most vulnerable in the recovery process. A requirement to prioritise the vulnerable has also been included as a mandatory requirement for insurers,” said Mr Grafton.

“Insurers will need to make considerable system changes to comply with the new Code, so an implementation date of 1 January 2016 allows for system modifications to be fully applied and tested,” said Mr Grafton.

The ICNZ received submissions from organisations and members of the public in the review of the Code and an independent peer reviewer, Hon David Caygill, had access to all submissions, as well as drafts of the report and the new Code throughout the process.

“The Hon. David Caygill advises that the report responds fairly and comprehensively to the submissions the Council received, and that the amended Code is a considerable improvement, particularly with respect to lessons learned from Canterbury,” said Mr Grafton.

ENDS

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