Bayly AndrewCONTRACTS OF INSURANCE BILLFirst ReadingHon ANDREW BAYLY (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Contracts of Insurance Bill.SPEAKER: That legislative statement is published under the authority of the House and can be found on the parliamentary website.Hon ANDREW BAYLY: I move That the Contracts of Insurance Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 3 September 2024.The Contracts of Insurance Bill will modernise insurance law and make it easier for everyday Kiwis to get insurance and make a claim. The existing legislation is complicated and dated. Some of it is over 100 years old. It's difficult for consumers to know their obligations and the system can operate harshly. Let me give you a real-life example: a wife tried to make a life insurance claim when her husband was killed by a truck driver. The claim was denied because the insurers said they hadn't disclosed a former bankruptcy. I think most New Zealanders will agree that this is not fair or right.Well today I'm proud to say that this is all about to change. This bill will make it much harder for an insurer to avoid cover or to refuse to pay a claim. The bill makes a really positive change to consumers by shifting the onus on to insurers. I'll speak more about that shortly but in summary there will be no more guesswork for consumers about what they need to disclose. Instead it will be the insurer's responsibility to ask the right questions. We are also requiring insurance policies to be written in simple terms. This will make it easier for Kiwis to read and understand policies and we're requiring insurers to pay claims in a reasonable time frame.These changes are all about simplifying the system for everyday Kiwis and giving them peace of mind so they know when disaster strikes that their insurer will be quick and provide fair compensation. It also makes a series of commonsense changes that provide certainty and security for the insurance market. This is important because increased risk means increased insurance costs and premiums. This ultimately hurts Kiwi households and in a cost of living crisis the Government is acutely aware of the need to keep insurance premiums to a minimum.For insurers issues have arisen over time that can lead to perverse outcomes and create challenges for insurers to accurately quantify risks. This has flow-on effect for prices and willingness to offer insurance. This bill addresses these issues and make changes to support well-functioning insurance markets for both insurers and policyholders. This bill addresses continuing and longstanding concerns of consumers and industry groups about different weaknesses of the current law. The bill follows a series of different reviews including by the Law Commission in 1998—1998; I just want to reflect on that—to improve insurance law in New Zealand and will bring our law into line with international best practice. The Financial Markets Authority will monitor and enforce compliance with the new regime.The bill has a number of elements to it. Firstly some of the key features are that it will make significant reforms to rules about disclosures of information to insurers and insurers' remedies. Secondly it will enable consumers to better understand and compare insurance policies. Thirdly it makes a number of other changes of a more technical nature to improve the operation of law for insurers and to consolidate and modernise New Zealand's insurance legislation. I will speak to each of these in turn. The first one is the policyholder duty of disclosure.This bill makes significant changes to the rules about disclosure of information to insurers. Currently the law requires policyholders to tell insurers everything that is relevant to the insurer's decision to offer insurance and how much to charge in premiums. Many consumers are unsure what insurers want to know or that this duty even exists. Consequently consequences for failure to disclose information to insurers are harsh. This bill reforms this duty by ensuring that consumers will need to answer an insurer's questions honestly and accurately rather than working out what to tell their insurer. Businesses—or in other terms non-consumer policyholders"—will need to make sure risks are presented fairly. If information is volunteered it must be truthful and not misleading.The bill provides that the issue as to whether a consumer has met the disclosure rules will depend on factors like how clear and specific the insurer's questions were and how clearly the insurers communicated the importance of answering the question. So for instance it would be more difficult for an insurer to say a consumer breached disclosure rules if the insurer asked a broad question such as "Tell us about your medical history." when applying for health insurance. The bill also introduces new remedies to ensure that insurers will respond proportionately when policyholders fail to disclose something they should have or when misrepresentation occurs. For example if an insurer would have charged higher premiums if the consumer had disclosed the truth the bill provides that the insurer can reduce what it pays the consumer for the consumer's claim. Insurers' ability to void insurance cover altogether and to refuse to pay claims will in practice be much more limited.The bill makes other changes to support the new disclosure duties. These include: requiring insurers to notify policyholders of the disclosure rules and the consequences of failing to comply and whether the insurer is likely to access third party information such as medical records; secondly providing that if a policyholder makes a claim the insurer pay any sums due within a reasonable time; and thirdly introducing a new duty requiring intermediaries to pass on material information. Unlike many other jurisdictions New Zealand has no specific legal requirements in relation to the presentation of insurance policies. The bill will require insurance policies to be written in clear simple language so that people can understand it and compare policies and make informed decisions.Consolidating and modernising the insurance legislation is an important facet of this bill. It brings together five separate pieces of insurance legislation into one—some of it over 100 years old. It addresses issues with existing insurance legislation that have developed over time and can lead to odd or unfair outcomes. These updates and improvements will help a well-functioning insurance market. It is really important that these reforms occur and they are long overdue and in many cases—in most cases—will certainly be supported and are supported by businesses by industry but most of all in time by consumers. A secure insurance market is integral to our financial wellbeing and is part of this Government's mission to rebuild the economy.I'm proud to be able to present this bill to the House today. It is an important part of making sure that New Zealanders can get cover often at a time when they most need it when there's exceptionally severe issues that are happening in their lives. They need to be able to get insurance and know that the insurance industry stands alongside them in supporting them during those difficult times. I think this bill strikes a balance in achieving that. On that note I commend this bill to the House."