Learn how the Contracts of Insurance Bill introduces fairness and clarity to New Zealand’s insurance laws.

This is a significant milestone for policyholders, insurers, and the insurance industry as a whole. With a focus on fairness, clarity, and accessibility, the proposed changes will help bring New Zealand’s insurance laws in line with international best practices—something that has been overdue for many years.

For anyone holding insurance policies—whether personal or commercial—it’s important to understand what these changes mean for you and how they will affect your obligations and protections.

What are the proposed changes?

The Bill is intended to modernise and improve the law governing insurance contracts in New Zealand, ensuring that they are clearer and fairer for everyone involved.

The key changes include:

• Modifications to the law relating to the duty of disclosure at the time of entry into an insurance contract. Under the existing law, consumers must disclose any information that might influence a prudent insurer. Under the new law consumers will have a duty to take reasonable care not to make a misrepresentation to the insurer. Non-consumers will have a duty to make a fair presentation of the risk.
• Introducing proportionate remedies for a policyholder’s failure to disclose.
• Insurers will be required to ensure policies are worded and presented in a clear, concise and effective manner.

• A new implied term in insurance contracts that insurers must pay claims within a “reasonable time”, which includes a reasonable time to investigate and assess the claim (including to gather information for those purposes).Regulating the use of genetic testing information in insurance. This is to address concerns over insurers limiting cover, or increasing premiums, for life and health insurance as a consequence of genetic testing results. The changes follow similar provisions introduced in Canada and Australia.

How will the changes affect you?

The Bill represents significant change to insurance law in New Zealand.

The changes seek to balance the interests of insurers and insured. This can be seen particularly in the changes designed to safeguard access to life and health insurance for those who have undergone genetic testing.

It is also apparent in the modification of the duty of disclosure and given issues around disclosure are common and it is hoped that the revised duties will clarify obligations and reduce the number of disputes. As described by the Minister of Commerce and Consumer Affairs “The onus is on insurers to ask the right questions and consumers must simply provide honest answers”.

The changes have been welcomed both by consumer advocate groups and the insurance industry itself, with the chief executive of the Insurance Council of New Zealand noting that:

“The new legislation tidies up New Zealand’s mishmash of outdated insurance laws into a single framework to support well-functioning insurance markets. It also brings New Zealand in line with international best practice”

When will the changes come in?

Timing for implementation of the bill has not yet been confirmed, although the Government had previously indicated that it would be passed before the end of the year.

In the meantime, there is significant work for the insurance industry to update their systems and procedures before the changes come into force.

The Contracts of Insurance Bill marks a pivotal moment for New Zealand’s insurance law. By modernising the duty of disclosure, protecting access to life and health insurance, and ensuring clear and effective policy wording, the changes aim to create a fairer and more transparent insurance system. These reforms will benefit policyholders and insurers alike—bringing clarity, balance, and peace of mind to an area that touches the lives of so many New Zealanders.

Do you have questions about the contracts of insurance bill?

Understanding how these changes affect your insurance obligations and protections can be complex. Whether you’re a consumer, a business owner, or an insurer, it’s important to seek clear, expert advice.

At Cavell Leitch our dispute resolution team is here to help. If you have any questions about the Contracts of Insurance Bill or its implications, don’t hesitate to get in touch with our experts. We are here to provide clear guidance tailored to your needs.