By Dr Bevan Marten*
IN the next two months New Zealand’s Ministry of Business Innovation, and Employment (MBIE) will release an issues paper on insurance law reform. This will start the ball rolling on a wide ranging, and long overdue, set of insurance law reforms.
The project’s remit extends to rules around pre-contractual disclosure, remedies, unfair contract terms, and aspects of industry regulation.
New Zealanders will approach this process with a sense of déjà vu. We have been here before, in 1998 (Law Commission report), 2004 (the Law Commission again), 2006 (Ministry of Economic Development report), and 2008 (Minister of Commerce cabinet paper).
Nothing changed except the Government (later in 2008), but their agenda had no space for insurance law reform. From 2010 the Canterbury earthquakes forced insurance into the forefront of national debate, but the issues were primarily around measures of indemnity, and the Government’s role in spreading the risk of natural disasters.
While New Zealand put questions of disclosure to one side, other countries were hard at work. The United Kingdom brought in the Consumer Insurance (Disclosure and Representations) Act 2012 and the Insurance Act 2015 to sweep away the traditional approach in both the consumer and commercial fields. Australia can of course point to over 30 years of fresh thinking with its Insurance Contracts Act 1984 and subsequent amendments.
In each case the question of “what must I disclose to the insurer?” has been answered not with the standard “whatever a prudent insurer would think material”, but with a more nuanced and insured-friendly approach. Whether the answer was to focus on the questions an insurer asks of its prospective insured, or to assess the fairness of the insured’s presentation of the risk, the old law was unsustainable.
New Zealand has been left behind.
Unless it wants to capture the legal historian package holiday market, it is time for New Zealand’s insurance industry and legal profession to get behind MBIE’s efforts and help bring this reform to fruition.
It could be as simple as making a choice between legal harmonisation with its closest neighbour, or following in the footsteps of the jurisdiction from which New Zealand has traditionally sourced its insurance law.
Readers of Daily Cargo News may also be interested in the fate of the Marine Insurance Act 1908 – child of Chalmers’ 1906 effort, and cousin to Australia’s 1909 version. The marine branch does fall within the terms of the review, but the sense is that New Zealand is not preparing for anything too radical in this area. Perhaps we might even see the (very) late insertion of the “utmost good faith” provision which never made it into the Kiwi act, for reasons one of the historians will have to figure out during their vacation.
The MBIE consultation process is set to last well into 2019, so a final legislative decision is some way off. Nonetheless, the new Minister of Commerce and Consumer Affairs, Kris Faafoi, is to be congratulated for bringing this reform on to MBIE’s agenda early in the Parliamentary cycle. The insurance industry has made a decent go of self-regulation through its Fair Insurance Code, but binding change is long overdue.
*Dr Bevan Marten is a senior lecturer at Victoria University of Wellington School of Law and a partner at Izard Weston Bevan.Marten@izardweston.co.nz