
Every business owner will be familiar with the challenges of choosing and managing insurance policies. Risk is a part of the everyday, and that includes making sure your business is sufficiently covered financially.
On 2 May 2024, the Government announced that current NZ insurance law will be modernised and improved, to enable consumers and businesses to effectively protect themselves against risk.
Commerce and Consumer Affairs Minister, Andrew Bayly, explained in a press release:
โThese reforms are long overdue. New Zealandโs 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 itโs about time we brought insurance law into the 21st century.โย
The changes have been set out in the Contracts of Insurance Bill, and this Bill is expected to be passed by the end of this year. Weโre here to take you through what you can expect.
What changes have been proposed?
The planned reforms have been in the making for a while now. They were initially introduced in November 2019, with the then-Labour and NZ First coalition government in charge, although no changes were made at the time. The reforms were brought back into consideration in April 2024 by the current government.
The raft of changes, according to the Government, are to ensure the following:
- That responsibility falls on insurers to ask consumers the right questions when processing new insurance policies, rather than leaving it to consumers to provide information.
- That insurance policies are written and presented clearly for consumers.
- That insurers respond proportionately when customers have misrepresented themselves, or failed to disclose something they should have.
- That insurance-specific exceptions from the unfair contract terms provisions in the Fair Trading Act 1986 are removed, and instead there is clarification on which insurance terms are part of the โmain subject matterโ of the contract.
- That there is a set definition of a โreasonableโ period of time during which an insurer must pay out on claims.
- That the Financial Markets Authority will have increased powers to monitor and enforce compliance with new requirements.
The changes themselves are numerous and detailed, but all follow the principles above in their approach. For example, there are a list of factors that will be considered to define what a โreasonableโ period of time looks like for different insurance claims.
Likewise, insurers have additional legal compliance to consider through these changes, and will have new rules to follow when they deem that a consumer has provided insufficient information.
What will they mean for businesses?
For businesses, these reforms could be a positive change. They will have additional rights when it comes to the insurer/consumer relationship and they could potentially gain more clarity into the policies they hold. They could also see better timeframes with regards to the speed of payouts.
Of course, that all does depend on the insurers that businesses work with. Fair insurers who operate in good faith are likely to follow a lot of the aforementioned principles already. However, these reforms may keep the ones who donโt in check. For any business owner who has had a negative experience with their insurance provider, theyโll be hoping that these changes make a difference in the future.
When will these changes take effect?
The Contracts of Insurance Bill had its first reading on 2 May 2024, and is likely to pass by the end of 2024. To be passed, it still has to go through a select committee, a second reading, a committee of the whole House, a third reading and then finally receive Royal Assent.
Employment Hero is here to help employers
We know just how hectic it can be when youโre running a business. Organising and managing comprehensive insurance is just one of many responsibilities you hold, especially if youโre managing people, payroll and recruitment in-house.
Employment Hero is designed to support employers so that they can get more time back in their day. Our innovative system helps with all aspects of HR and payroll, from finding top talent to automating payroll and supporting compliance.
To find out more about how Employment Hero can support your business, book a call with one of our team today.
Disclaimer: The information in this article is current as at 7 March 2024, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your research and to seek professional advice before making any decisions or relying on the information in this article.