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Commerce and Consumer Affairs Minister Andrew Bayly announces insurance law reform, wants to bring insurance law ‘into the 21st century’

Insurance / news
Commerce and Consumer Affairs Minister Andrew Bayly announces insurance law reform, wants to bring insurance law ‘into the 21st century’

Commerce and Consumer Affairs Minister Andrew Bayly says New Zealand’s insurance law is “complicated and dated” and needs to be brought into the 21st century.

The Contracts of Insurance Bill had its first reading in Parliament on Thursday after being introduced on Tuesday.

Bayly says insurance law reforms are “long overdue” as some laws are over 100-years old and the National-Act-NZ First government will be modernising the laws to give people better protection and security in the event of a disaster.

“The recent extreme weather events show just how important a well-functioning insurance system is and it’s about time we brought insurance law into the 21st century,” Bayly says.

“A secure insurance market is integral to our financial wellbeing and is part of this coalition government’s mission to rebuild the economy.”

The Contracts of Insurance Bill was drawn as a Member’s Bill promoted by Bayly's predecessor, Labour MP Duncan Webb, in late March.

Bayly said the Contracts of Insurance Bill would make the insurance system simpler and give premium payers peace of mind that “when disaster strikes their insurer will provide quick and fair compensation”.

“We have all heard stories of people being denied compensation because they didn’t realise they had to disclose certain information, or waiting months on end in limbo while they wait for a decision from their insurer. This isn’t fair or right,” he said.

Bayly intends to pass the Bill before the end of 2024 and said he had consulted with the insurance industry in order to make sure the Bill balanced “customer protection with providing certainty for the market”. 

“In a cost-of-living crisis, we are acutely aware of the need to keep insurance premiums to a minimum,” he said.

“The Bill makes a really positive change for consumers by shifting the onus of disclosure duties to insurers. Right now, consumers must disclose everything that might be relevant to an insurance policy. But it’s difficult for everyday Kiwis to know what information is relevant. Under this Bill, there will be no more guesswork for consumers. It will be insurers responsibility to ask the right questions, which will reduce insurers’ ability to void cover or refuse to pay claims.”

Bayly says insurers will need to pay customers within a reasonable timeframe and use simple terms in order to make insurance policies easier to understand, calling these “big wins” for consumers.

“This Bill moderates the cost of insurance by maintaining things that are working well. The last thing I want is to introduce risk and uncertainty, which would drive up insurance premiums and ultimately harm everyday Kiwis,” he says.

At the Insurance Council of New Zealand’s annual conference in March, Bayly said the increase in severe weather events means the New Zealand insurance industry “has a more important role to play than ever”.

Bayly says it's clear New Zealand needs insurance security “more than ever” as the country faces down increased frequency and severity of climate change events and natural disasters.

“It’s evident we need to remain adaptable to meeting the evolving needs of kiwis, kiwi businesses and New Zealand itself,” he told conference attendees.

“The insurance industry has a big part to play in that.”

The Insurance Council of New Zealand (ICNZ), the lobby group for general insurers, welcomed the first reading of the Contracts of Insurance Bill, describing the overhaul of the legislation as well overdue.

"This Bill has been long awaited and I congratulate the Minister of Commerce and Consumer Affairs, Andrew Bayly, for his support and commitment to modernise New Zealand’s insurance law and bring it in line with international best practice," the ICNZ's new chief executive Kris Faafoi says.

"The current legislation is widely acknowledged to be outdated, unwieldy and not fit for purpose in today’s world. The new Bill will help tidy up, rationalise and update New Zealand’s insurance law into a single framework to support well-functioning insurance markets for both insurers and consumers."

Faafoi was Commerce and Consumer Affairs Minister during the first term of the previous Labour-led government. 

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How long before EQC includes flood risk to socialise “climate change” ?


"Wow" are the words that escape my lips, from being the minister of Commerce and Consumer Affairs to Chief Executive of the Insurance Council of New Zealand.

The insurance industry, an industry where 85-90% of general insurance is controlled by 2 Australian entities. With one of these entities controlling 60 - 70% of the general insurance market. A monopoly or duopoly? You decide.

To put into perspective, 85-90% of profits made in the general insurance market go to Australia.

Several industry's that supply the insurance industry have a "work mix" of 80-90% of available business being paid for by the insurance industry directly or indirectly. Meaning supply the insurance industry or shut up shop.

This severely imbalanced insurance market empowers these entities to carry out “cost fixing” the opposite or “price fixing”.

Apart from the healthy profits that are annually funneled back to the Oz motherland each year, this “cost fixing” costs New Zealand dearly as Kiwi insurance supply chain businesses are stifled and bullied via work starvation or oppressive contracts.

What are the effects of this? Businesses stifled by a work provider market imbalance are less profitable, less likely to invest in R&D, less likely to export expertise and or expand, locally or overseas. They also contribute less GST, less PAYE, pay less tax in general because profits and sales are minimised. This also leads to lower wages of course. In some cases for highly skilled work, which leads to a loss of workers to overseas markets and creates a perception of general unattractiveness to young prospective industry entrants.

In summary the effects of letting this monopoly or duopoly continue unabated are significant sums of NZ hard currency going off shore each year, reduced tax take from the SME eco system, reduced R&D investment and less young people wanting to work in these supply chain industries. Growing Zombie industries you might say.

Some people will say if it doesn’t work get out of the industry, or go overseas where the industry is not as suppressed, but why should we be forced out of our own country by foreign companies given free reign to practice market exploitation?

The competition divide: Why are Aussie insurers' profits so high in NZ? | Stuff


The largest entity in the general insurance market captures around 35% of the premium, not 60-70%. 

The 85-90% of the market that you claim to be either a monopoly or a duopoly is actually shared amongst around a dozen underwriters, based out of Australia, South Africa, New Zealand, London...

If you're going to go off on a rant get the facts right or leave them out all together - makes you sound like you know what you're talking about. 


About IAG New Zealand  IAG New Zealand is made up of IAG New Zealand Limited trading under the NZI, Lumley, State, and AMI  brands. IAG New Zealand  Limited also underwrites general insurance for ASB, BNZ and The Cooperative Bank, and Westpac. IAG New Zealand Limited has a  45% share of the general insurance market, managing 3.8 million policies of 1.5 million New Zealanders. IAG New Zealand Limited  is a wholly owned subsidiary of Insurance Australia Group (IAG), Australasia’s largest general insurer.   IAG New Zealand Limited, Private Bag 92 130, Auckland 

Thats from 8 years ago 2016, written and published by IAG, just IAG had 45% then, you don't think its grown since then?


If the bill expects to be able to allow non disclosure, you can expect premiums to skyrocket, and many more will fall into the uninsurable category.


I think it is clarifying what needs to be disclosed. The amount average person probably doesn’t in some cases understand what is actually relevant or even know the information existed (in a small number of cases). My brother had issues with disclosures when his medical notes were reviewed as the Dr had chosen not to tell him something but had made a note to monitor it. The reason given that it wouldn’t be good for his blood pressure and was probably nothing. He has a different Dr now


Key words "into the 21st century" aka accommodating for the greater use of AI to dictate insurance claim approvals/denials, quality assurance, fraud reduction and calculate risk profiles. Also by increasing the data disclosure requirements at signup of insurance contracts it effectively restricts access to insurance even more then a minor non disclosure ever did (as the later could be challenged but the former can be used to deny a contract being available to a customer without the provision of data & assessment).

In other words: more ways to restrict access to medical & housing insurance and increase premiums to increase profits and market share (although it is hard to increase market share in a duopoly that near a major monopoly so read as make it easier for the 21st century tech to increase profits).

Given the actual effectiveness of the commerce commission and their actions taken I an pretty convinced they are there to be seen as if they are doing some busy work but actually waste time so they can keep the status quo.

Endorsing insurance companies to carry more personal and private data through financial incentives in case of risk of non disclosures is actually way worse to the public then letting the customer provide what they thought was relevant. Insurance companies IT systems leak like a sieve. With the greatest threat still being the human factor, followed closely by using those keys to access their systems. Not to also forget the massive growing number of uninsurable kiwis that would be created by this law.


“customer protection with providing certainty for the market”

What is certainty for the market?

Insurance companies have been a power to themselves for far too long.  They write their own "laws" and police themselves.  There is not much redress in the judicial system.  Legal costs to pursue an insurance company can quickly eat into any compensation due.

How do we truly balance the corporate MO of maximising profit and returns with the needs, rights and wellbeing of the customer? Can we stop classifying people/customers as consumers?

It's not just natural disasters that need to be considered.  The information age is providing us with reams and reams of data yet we seem to forget so quickly.  It wasn't that long ago there were numerous articles highlighting how insurance companies abuse their power when it comes to paying out life insurance and other medical insurance policies.  They're able to delay and delay, interpret evidence according to their own bias', and only adding to the stress of the individual.  I have my own personal example of this.  We also have the Australian review a number of years ago highlighting the behaviours of the insurance industry, but we didn't see the need to follow up here.

The insurance council praising this action is laughable.  Is it hypocrisy, irony or virtue signaling?  They could've been proactive and responsible for updating their own practices without the need for regulation.

There is no competition when numerous "brands" are owned by one parent company.  This applies everywhere in other "markets" too.  It makes a mockery of our beliefs in economic competition and why nobody sees this is beyond me.  It highlights again that the FIRE sector is the economic ruler.

Of course if we didn't fear financial loss so much, insurance companies wouldn't have so much power.


Imagine seeking payment for cancer care that has been delayed because you once had an unrelated bowel upset due to food poisoning and now have to spend your last days chasing the insurance company through the courts. Or even worse being denied any insurance or medical coverage because of a couple bad periods with extended bleeding (as often can happen for many women e.g. who could later find ovarian cancer decades down the line unrelated to that but their insurance cover could be denied outright for everything on suspicion of endometriosis). Yep we are already at that point welcome to the world we are going to make even worse with more private data disclosure required and rigid AI decision boundaries.


I would have though the idea is to provide less data as the idea is everyone pays a little to cover those who have to claim the more data provided the more cherry picking the insurance companies do!