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ICNZ Newsletter, April 2018

Fair Insurance Code review

ICNZ is currently reviewing the Fair Insurance Code to ensure it remains relevant for consumers.

ICNZ members, which comprise 95% of general insurers in New Zealand, adhere to the Fair Insurance Code, an industry best practice standard.

The Code sets out the responsibilities of both insurers and consumers and covers what should be disclosed for different types of insurance as well as communication timelines and complaint processes. Any issue that cannot be solved directly with an insurer may be escalated to an independent external disputes resolution scheme with the decision being binding on the insurer.

General insurers already self-regulate to a much greater degree than current regulations require. We believe the Code is New Zealand's best example of self- regulation and sets high standards of customer service from members of ICNZ.

Public submissions on the review of the Code closed on 2 March 2018. ICNZ received 25 submissions from institutions and members of the public.

Key themes to emerge have been concerns around privacy and storage of data, accessibility of the Code in terms of language and format, disclosure obligations, concerns that timeframes included in the Code are not currently being met, and the need for better clarification of both the internal and external dispute resolution processes.

Consultation with members is currently underway and the ICNZ Board will receive a report in June.
It is intended a revised Fair Insurance Code will be published in 2019.

Fair Insurance Code Compliance Committee changes

Sir David Carruthers has been appointed to the Fair Insurance Code Compliance Committee effective from June. Sir David recently retired as the Chair of the Independent Police Conduct Authority and before that he was Chair of the Parole Board and Chief District Court Judge.

Sir David replaces former Governor-General Sir Anand Satyanand who has served on the committee since its inception in 2015. "Sir Anand brought a wealth of legal knowledge and wisdom to the role and leaves the group in good shape for the next chapter as we undergo the next major review of the Code" said Tim Grafton, ICNZ CE and Chair of the Committee.

The Hon David Caygill and Dr David McGee CNZM QC will remain members of the Committee.

Grafton says he is "delighted that such high calibre individuals who bring a vast amount of skills and experience will continue to oversee compliance with the Code".

The Committee’s role is to monitor breaches of the Fair Insurance Code, report data on the number of breaches of the Code to the ICNZ Board, investigate unresolved significant breaches of the Code and make recommendations to the Board on those breaches.

Insurers welcome review of insurance contracts law

The Insurance Council welcomed the release of the terms of reference for the Insurance Contracts Law Review last month and will work closely with officials to contribute when the discussion paper is released.

There are currently a large number of laws that impact on insurance contracts in New Zealand. This review will be an opportunity to assess and possibly consolidate those laws in a way that serves everyone.

Disclosure is shaping up to be the hot topic and the industry intends to continue to be ahead of regulation with the current review of the Fair Insurance Code already underway.

The Code already requires members to respond reasonably to what an insured does not disclose and leaves the test of what is reasonable to the independent external dispute resolution schemes to determine.

Another issue highlighted in the terms of reference was the ability of consumers to make comparisons by price.

“We do not favour simple price comparisons for insurance because it encourages vulnerable people to buy solely on price and not consider whether the product is appropriate for their needs,” said Grafton.

“Insurance is not a commodity like electricity, so we need to be mindful of the need to encourage informed consumer choice. It’s incredibly important that consumers understand the ins and outs of any policy they buy. This is an important part of building financial capability. By reducing insurance solely to comparable prices, we worry consumers will be deprived of the opportunity to truly understand and consider what they’re purchasing” he said.

First quarter weather claims $93m

Three major storms struck New Zealand in the first quarter of 2018: the January storms, Cyclone Fehi and ex-Tropical Cyclone Gita. Together, they totalled $93.5 million in insured losses – money insurers have injected back into those communities to help people with repairs and resettlement.

"We are seeing a trend of insurers and local councils in affected areas working together to quickly mobilise support for displaced and stressed people. ICNZ and insurers have set up in community halls and centres across the country along with social and emergency services to provide on-the-ground claims guidance and processing" said ICNZ CE Tim Grafton.

"Being there in person in times of need is the core business of insurance and we know when disaster strikes traditional communication channels don't always work. Information is also harder to digest when people are dealing with the loss of property and have had their lives disrupted so that face-to-face contact is highly valued by customers" he said.

ICNZ will continue to lobby central government to take ownership of identifying and reducing risks to people, property and the environment, and providing clear guidance to local government as that is where many decisions are made.

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