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Insurance contracts to become easier to understand & fairer

New Zealand consumers will have greater certainty about their insurance cover when they need to make claims as a result of proposed government changes.

“Insurance is vitally important in supporting consumers and businesses to be financially resilient when unexpected events happen,” Minister of Commerce and Consumer Affairs Kris Faafoi said.

“The current law is outdated, and many insurance policies are complex and difficult to follow. This means consumers can be buying insurance products they don’t understand, which can be poorly suited to their needs, and can leave them in the dark about what they should disclose to their insurer.

“We want to fix these issues. So, last year the Government launched a review of insurance contract law.

“Following extensive public feedback, we are improving the rules around what policyholders must disclose to insurers, making changes to allow people to more easily understand their policy, and we’re addressing unfair contract terms,” Minister Faafoi said.

Changes the Government has agreed on include:

• Placing the responsibility on insurers to ask consumers the right questions when processing new insurance policies, rather than leaving it to consumers to know what to tell their insurer.
• Requiring insurance policies to be written and presented clearly, so that consumers can easily understand them.
• Ensuring insurers respond proportionately when consumers don’t disclose something they should have, or misrepresent themselves.
• Strengthening protections for consumers against unfair terms in insurance contracts.
• Extending powers to the Financial Markets Authority to monitor and enforce compliance with new requirements.

“All New Zealanders deserve the assurance that when they claim for losses, their policy will provide the cover they expected. However, longstanding issues with insurance contract law have been undermining the benefits of being insured.

“These measures will complement decisions the Government made earlier this year requiring insurers and other financial service providers to treat their customers fairly.

“It’s about ensuring financial products and services are appropriate for consumers to use and properly meet their needs.

“We want to be sure we’ve landed on solutions that will work in practice, so we expect to consult with the public next year on draft legislation before any changes come into effect,” Kris Faafoi said.


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