Contracts of Insurance Bill, Contracts of Insurance (Repeals and Amendments) Bill

I present a legislative statement on the Contracts of Insurance Bill.

ASSISTANT SPEAKER (Teanau Tuiono): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon ANDREW BAYLY: I move, That the Contracts of Insurance Bill and the Contracts of Insurance (Repeals and Amendments) Bill be now read a third time.

I am pleased to stand before the House today for the third reading of the Contracts of Insurance Bill. It has been a long time in the making and it is an exciting day. Six years of waiting has finally come to fruition, and it’s great to be standing here to be able to deliver this outcome for the industry and for policyholders across New Zealand.

This bill, once passed, will mark a turning point for New Zealand’s insurance landscape, modernising and bringing clarity and fairness to a sector that touches the lives of nearly every New Zealander. Today, we present a bill that addresses longstanding concerns with our insurance law. Our current insurance legislation has laws that root back over a century and are spread across six different Acts. This bill creates a modern, unified framework designed for today’s consumers, businesses, and insurers. In doing so, we are creating an insurance sector that can operate with confidence, transparency, and accountability.

I want to first of all thank the Finance and Expenditure Committee for their diligent work on this bill. I want to especially congratulate and thank the chair, Stuart Smith, and members of the committee, who have refined and improved the bill. Thank you also to the many people who submitted at the select committee stage. This includes consumer advocates, industry representatives, and legal experts, whose insights have been invaluable in shaping this legislation. The committee’s recommendations have strengthened the bill considerably, addressing key concerns such as the use of genetic testing information and updating certain technical provisions.

One of the key or most significant changes the bill makes relates to disclosure of duties. Under existing law, consumers must disclose any information that might influence a “prudent insurer”, an ill-defined standard that has led to unintended and often harsh outcomes. The bill now introduces a new standard requiring consumers simply to take reasonable care not to misrepresent information. This is a more balanced requirement that respects the rights of policyholders, while allowing insurers to make informed underwriting decisions. For businesses, who face different and more complex insurance needs, the bill introduces a fair presentation of risk standard, aligning with best practices internationally and providing a more structured approach for commercial insurance policies. These changes aim to reduce the likelihood of claims being denied due to misunderstandings or unintentional non-disclosure.

Insurers will also now have to set proportionate remedies to respond to any breaches of disclosure obligations, depending on the circumstances. If a policyholder makes a minor or honest mistake, insurers can no longer void the contract, but must respond in a way that fairly represents the nature of the error. This creates a fairer environment for consumers while ensuring that insurers can better manage risks appropriately.

Another noteworthy addition to the bill is the changes to account for genetic testing. Following select committee submissions, the bill has been updated to safeguard Kiwis’ access to life and health insurance if they’ve taken out a genetic test. It should be noted that genetic testing is a highly valuable emerging technology that can unlock significant health and productivity benefits. In many cases, we may wish to encourage Kiwis to take genetic tests to allow them to benefit from early disease detection, more precise diagnoses, and targeted treatments. However, there are overseas examples of insurers limiting cover or increasing the cost of premiums due to genetic testing results. While we do not have evidence that this is routinely happening in New Zealand, the bill now includes provisions which mean that the Government can, if needed in the future, regulate the use of genetic testing results by insurers.

By adopting this flexible regulatory approach, we are not locking ourselves into rigid legislation that may become outdated as science advances. This approach allows us to keep pace with the rapid developments in genetics and to adapt our protections, as needed. Canada and Australia have adopted similar approaches, and these changes bring New Zealand more closely in line with international best practice. I want to thank those who brought this issue to the committee. It was a matter that we had to deal with during the process, and I think it’s a great outcome.

Another important component of this bill is that for the first time, insurance policies must be settled within a reasonable time. Insurance exists to protect people when they need it most, and ensuring timely payments is central to that purpose. The bill does not impose a rigid time frame, recognising what is reasonable varies in the size and complexity of the claim. This flexibility is essential, particularly during times of major crises, when large volumes of claims may strain resources. Instead, the bill relies on the principles of fairness and accountability. I’d say to many people who might be listening that the courts have the ability to decide what is fair in the circumstances. Like other changes, this move brings New Zealand in line with our international partners.

Transparency is a guiding principle of this bill. Insurance policies are often technical and difficult for consumers to navigate. Unlike many jurisdictions, New Zealand has not had specified legal requirements about the presentation of policy by insurance companies, but this bill amends that. Insurers will now be required to write and present contracts in plain terms. This is about empowering consumers, providing them with the tools to understand, compare, and select policies that best meet their needs.

Creating a fair and stable insurance market means balancing consumer protections with the practical needs of insurers. While the bill includes strong consumer protections, it also acknowledges the importance of stability for insurers. For example, broad exclusions for insurance contracts under the Fair Trading Act’s unfair contract terms regime remain in place. This decision is about protecting the ability of insurers to price their risks accurately, avoiding the potential for premium increases that could limit access to coverage for consumers.

In conclusion, the Contracts of Insurance Bill represents a landmark moment for New Zealand’s insurance law. It reflects six long years of consultation, numerous reviews, and the input of numerous stakeholders. This bill is a testament to this Government’s commitment to modernise our laws and create a fair, transparent, and robust insurance market. I look forward to seeing the positive impact this bill will have on everyone, particularly New Zealand, as they go and get new policies. I am proud to commend the Contracts of Insurance Bill to the House for its final reading.

The question is that the motion be agreed to.

Mr Speaker, thank you for the opportunity to take my final call in the debate and the work of Parliament on the Contracts of Insurance Bill, or the two bills that it has now been split into. I want to begin my contribution by acknowledging the work of this Minister and also the previous Labour Ministers who have worked for a long time on a very complex piece of law that, as the Minister says, stretches back many, many decades in New Zealand’s legal history, and this is the first time that it will be consolidated in this way. For that, we can all celebrate because Parliament should be interested in the clarification of this law so that it is clear and also consistent for the consumers who rely on Parliament to set the tone in a law governed, generally, by contracts between contracting parties with very different amounts of power in the negotiation as to what the contractual terms will be. That is a good thing.

What we cannot accept here are two changes, in particular—which would remove key advances for consumers—from the time when this was presented in more general terms to Cabinet, to now, when the Finance and Expenditure Committee has given it a thorough going over and, essentially, has poked holes in a net of protections which were designed to help the little guy in the situation where different groups of insurance consumers around New Zealand were getting different deals from their insurers about the same kinds of issues, whether that’s their home insurance, their car insurance, or their life insurance. It’s right to put on record that those two things—which we cannot accept—really come down to timing and delay, and the provisions around when insurers are required to pay out to consumers in their arrangements.

Those will be a small group of people and not very often. Not every year will New Zealand have the kinds of big disaster events which create huge delay for consumers. There won’t be thousands and thousands of people affected by that in those events, but there will be some people who are affected very, very deeply, and this is a change which has been made since Cabinet considered it which will significantly impact their rights to be able to receive payouts for their insurance and to have their claims advanced in a timely way. It will, essentially, go back to the position that it was in prior to when this legislation was being drafted, where it was all down to the insurers and it’s down to the goodwill of those providers to pay out quickly, and we know that in New Zealand’s small market, that does not happen all the time.

The second issue is the change—and the Minister quite rightly points out that a positive change overall is that, now, this law consolidates the market practice currently. What insurers do now, generally, in the New Zealand market is that they won’t void an entire claim because of a mistake, and that’s a great position for the law to be in. It’s really important that we acknowledge that insurance contracts are contracts of the utmost good faith and that has always required insurers to approach things with fair-mindedness, and that will often mean that for someone who has made a mistake without knowledge and intent of the nature of the mistake that they’re making, their entire claim won’t be voided and, therefore, not paid out. That’s a really important point of established law already.

What this legislation had the opportunity to do was to make it very clear that where someone like me, a policyholder, had made a disclosure that was deliberately fraudulent and I had made a claim where I knew that I was going to receive a benefit—in this case, a contract for insurance that I wasn’t entitled to—and that that would result in me getting payouts that I certainly wasn’t entitled to but I knew that it would result in that, then that was the thing that insurers would be able to rely on and not pay out for. That’s a really clear standard. Many of our laws rely on that fraudulent standard, and that deceit with a document or a statement that you have made is a really important standard.

Now we’ve gone back to what is quite unclear in the law. It’s the dishonesty standard, and whose dishonesty—objective or subjective dishonesty. This was all part of a pretty extensive committee stage where we didn’t advance what was intended here by Parliament. It is a shame because it leaves what is otherwise a really useful piece of law to consolidate the position in New Zealand, which is now back at square one, where a lot of the power is in the insurer’s hands to litigate these issues and we’re back to a position where the consumer doesn’t have the protection that they could have and should have had.

At the risk of also overstressing the importance of the genetic testing changes here—because this is a real once-in-a-lifetime opportunity to consolidate insurance law generally—genetic testing is the issue now, but we do not know how it will develop over time, and we do not know whether we will need extra legislation to deal with problems that arise in 10 or 20 years.

I would like to put on record Labour’s very, very tentative support at the committee stage for the regulations, which were not permissive. They required the Minister to think very carefully and use a set of criteria if he were to introduce regulations which would permit the use of genetic-testing information because we agree that this is an important emerging technology. We want New Zealanders to be able to use it, and we do not want them to be discouraged because their insurers would have access to that information and might deny them cover. It’s also thinking about the rights of vulnerable patients in this area. It’s communities of patients who will be affected by this; not just individuals. There are certain diseases and certain genetic conditions which will have the effect of people not being able to get insurance at all in some jurisdictions, and for that we’d want to be very careful about the way that information was used.

Since the committee’s deliberations, Australia has announced its intention to, effectively, ban the use of genetic testing by insurers and consider that after a five-year period. We think that’s materially irrelevant to the decision of the Minister here. I asked him at the committee stage whether he would consider taking out what the committee had recommended because of that, and he said no. I want to make it clear that when he uses his power—which he is required to under this legislation—to enact the regulations within two years and Cabinet needs to consider it again, a permissive approach will be roundly resisted by the sector of patients who are particularly interested in this and by the Labour Party members. It will be a headache for the Minister of Health if there is a permissive approach taken. That was certainly not the intent of the select committee at the time, and it was not the intent of Labour when it supported those regulation-making powers at the committee stage. However, we do agree that it’s really important to have something in our law that deals with this important issue, and it wouldn’t be good for New Zealand to have no protections whatsoever.

In conclusion, this is a useful way to advance New Zealand’s law and consolidate it here in legislation, but it is a missed opportunity to protect the consumers that it was all framed around when Labour began work on this and as has been framed in the Minister’s comments publicly and in the media. Because he has continuously said to this House and to the media that the legislation is about empowering consumers, the law should be read in that way, and it should be read as a consolidation of the consumer rights that now make up the market practice in insurance in New Zealand. Consumers should be able to hear the Minister’s comments when he says that this is about protecting their interests and have some confidence that this legislation advances that.

We do not support it, ultimately. We will not be voting for it, because we think it’s a missed opportunity to have fleshed out and developed those protections for consumers that New Zealanders really need, especially in our small insurance market. We think the process which this legislation has gone through has fallen short and it has not meant that consumers have had the opportunity to be able to advocate for the changes that they need in the face of reorganised submissions from the insurance industry, and for that reason, we’ll be voting against it.

Thank you, Mr Speaker. I rise to speak on what is now two bills, the Contracts of Insurance Bill as well as the Contracts of Insurance (Repeals and Amendments) Bill. Like the previous speaker Arena Williams, the Green Party would have supported this legislation should our amendments have been accepted by the Minister. Unfortunately, our amendments were not accepted by the Minister, and so we will not be supporting this legislation. However, I will speak on some of that later.

In saying that, this is legislation that is a long time coming. It has been in the works by the Ministry of Business, Innovation and Employment (MBIE) and by various interested groups for a number of years, and it was introduced by the previous Minister of Commerce and Consumer Affairs, the Hon Dr Duncan Webb, who also took part in a lot of the work that was done during the committee stages as well. It is incredibly comprehensive legislation and it does modernise areas in terms of insurance contracts in Aotearoa New Zealand.

There are definitely elements of this legislation that the Green Party believes are going to be good for consumers and for the people of Aotearoa New Zealand, one of which is having a clear separation between what is considered a consumer contract and a non-consumer contract. I think that level of clarity and, particularly, some of the structure and the boundaries and the scope that is being placed within that will, hopefully, be able to give reassurances to personal contracts that people tend to have, whether it is a contract for health insurance, life insurance, contents insurance, etc., etc.

Other than that, there are also other things that are considered to be an improvement, and one of the areas that I wanted to mention is around proportional remedies, which is outlined in Schedule 2, at clause 5. I think in this particular case, not having a contract being declared void should there be an error or should there be something that was not declared previously would also mean that it provides more reassurance, and it’s going to be better for the consumers in terms of that proportionality.

However, there are a number of areas that the Green Party feels are lacking in this particular bill, and one of them is laid out in clause 14 under Part 2. This is something that we discussed quite a bit during the committee stage, but then could not come to an agreement on it, and I think both the Green Party as well as the Labour Party have tabled amendments around the discussion of “fraudulently” versus “dishonestly”.

In our opinion, having the previous, original draft of this bill specifying “fraudulently” and then it being, in some ways, watered down to “dishonestly” does not provide the level of confidence from a consumer contract perspective that would allow people to be able to make those kinds of claims and not having insurance companies find ways to wriggle out of certain contractual agreements. As we can see, there is definitely a level of power imbalance between, particularly, consumer-based insurance contracts and also insurance companies, and to give you an example of that, one of the things that just occurred this last weekend was the fact that one of the tourists who was touring Aotearoa New Zealand, particularly in the Lakes District, just outside of Queenstown, had their vehicle washed away by a car and had some additional disputes with the particular rental company.

I think in those kinds of cases, it’s really easy, particularly if you are a tourist—and particularly if you are a tourist whose English is not your first language—to be coerced or to be threatened in a way by a particular insurance company or by a particular company on the basis of your insurance contract. I think that in those sorts of cases, having that extra level of consumer protection is really, really important, and I think that for here, having that wording being retained as “fraudulently” instead of “dishonestly” would really give the consumer just a little bit more reassurance. Unfortunately, this was one of the bottom lines for the Green Party to support this legislation, but our amendment was not supported.

A second part of this is around the genetic testing, which has been mentioned before. This is a serious concern for the Green Party as well, particularly when it comes to genetic testing and the dangers that this imposes to consumers. We are kind of disappointed with the fact that the select committee sort of made some recommendations, but didn’t go to the extent that we would have liked to see it go. There was strong evidence from the submissions that we have seen that support such a prohibition or failing to implement this, in favour of having the regulation-making power and the responsibility that is being placed both in terms of the consumer but also in terms of the insurance companies when it comes to elements of genetic testing and the mandate to declare any sort of predisposed or pre-existing conditions.

When it comes to this particular legislation—and I mentioned this before in terms of this scenario—something else that we thought was actually quite important is laid out in the second bill, the Contracts of Insurance (Repeals and Amendments) Bill, particularly around clause 183, which is inserting a new Subpart 6B in Part 6 of the Financial Markets Conduct Act. This is around the fact that there is now a duty on insurance companies to be able to assist policyholders to understand insurance contracts.

However, one of the things I mentioned previously in the scenario with the tourists and the issues around some of the rental vehicle concerns is the fact that, although we do see that some of the policies can be simplified and be clear in terms of the language, the way that it is explained and the scenario that, potentially, it relates to still has some gaps in it, because, again, it is easier for an insurance company, or for anyone who is more at the corporate level, to make certain assumptions or use certain legalistic phrases to the contract holder or to the policyholder to say, “Well, that was X.” or “That was Y.”, for example—you know, “That was reckless. You were travelling somewhere that you shouldn’t be travelling.” Again, it is to do with when we are implementing this and operationalising it, it’s a certain level, and we will actually be really interested to see how that is going to be teased out and implemented properly, with the benefits to the consumers and with the reassurance that it will place on the consumers.

There are a couple of other things that I would like to touch on. One of the things that also has been sort of addressed in this particular legislation is around the brokers, and this is under Subpart 2 in Part 4 of the Contracts of Insurance Bill. We think that the balance when it comes to addressing the duties of the broker hasn’t really been balanced correctly, because in some ways there is still a lot of responsibility and accountability being placed on insurance companies. However, when we’re looking at brokers and the intermediaries, what was originally in the draft version and the MBIE report was not adopted in the latest version of the bill, and particularly, when it comes to where there are some precautions and there is some scope being placed around notification of insurance if the premium is not paid. However, we still don’t see that there’s the right balance and the right accountability being placed on the duties of a broker in the context of when they fail to make that premium payment when it is due and they fail to notify an insurance of the premium payment. So I think that is something that could have been further enhanced in this particular bill.

Finally, I still want to address the one of the core issues that we hear from the submitters around the changes to the Marine Insurance Act 1908. Understandably, we want to see this consolidation of the various insurance legislation, but then we have heard from submitters, particularly around the fact that, yes, having some changes to the warranty of seaworthiness when it comes to some of the repeal of the Marine Insurance Act is OK, but the fundamental change in clause 127 potentially will create further issues, and particularly when some of the marine insurance contract is on internationally standard terms such as the English law institute clauses. That level of clarity wasn’t really being teased out during the committee stages. It is also unfortunate that there are a number of other amendments that were placed during the committee stage that weren’t adopted. So, unfortunately, although some parts of this bill are good, the Green Party will not be supporting it.

Thank you, Mr Speaker. I rise on behalf of ACT to speak in support of the Contracts of Insurance Bill and its related bill, the Contracts of Insurance (Repeals and Amendments) Bill. This is an exciting day, I think, for New Zealanders interested in insurance and actually involved in the insurance sector. As has already been outlined by some previous speakers, this has been six years in development—six long years in development—and I do want to pay tribute to the current Minister of Commerce and Consumer Affairs, the Hon Andrew Bayly, and also to Dr Duncan Webb, who also has played a role in getting this to us today.

This legislation is about modernising and making more simple the insurance settings in New Zealand and making sure we are in line with countries around the world that we do compare ourselves with: the UK, Canada, and Australia. It is about making policyholders understand in simpler language what their responsibilities are and also what the responsibilities of insurers are. Insurance is very important in our society, and whether that’s home and contents insurance, life insurance—all kinds of insurance—we want to make sure that it is easily understood, well understood, and that we have a set of laws that are modern and fit for purpose and that can actually serve New Zealanders well. So that’s what we’re doing with this legislation, and it’s very exciting to have it at its third reading, and hopefully, it will pass the House and we can have it in place to really be serving the needs of New Zealanders going forward.

As has already been outlined this morning, it does set to put in place some new duties, both on insurers and those companies providing insurance—so the insured and the insurers—and it does also put in place some new provisions, which I’m going to talk about in a minute, which are actually dealing with a new type of technology, or a new issue, that did come up during the select committee process. And so, overall, we think this is very worthwhile legislation to support. As I said, it is going to modernise the settings under which insurance operates in New Zealand.

As has already been outlined a little bit, one of the areas I was obviously particularly interested in is around genetic testing. Prior to coming to this place, I actually did work in the healthcare sector and have learnt quite a lot about genetic testing and genomics and the exciting potential it brings. Obviously, as has already been talked about, Subpart 4A in Part 3 of the Contracts of Insurance Bill does deal with the ability of the Minister to make some regulations actually dealing with excluding genetic tests from insurance, and why is that important? Well, I was actually lucky enough to be engaged with the stakeholders that bought these issues to the Finance and Expenditure Committee. Again, it has been an area of interest for me for some time, and I was well engaged with them. I actually encouraged them to put this issue before the select committee because it is a really interesting emerging issue and it is really where science and insurance cross over. So, by putting in this provision, we’ve actually futureproofed New Zealand’s law.

As Arena Williams, the speaker from Labour, has said, Australia had been going through a debate about what they would do on this, and actually, we are in advance: if we pass this law shortly, we will actually have some legislation in place that can do what they have only announced they’re going to do. Again, I think the way the select committee dealt with this issue—and I know the Minister was very willing to engage on it. The solution we’ve come up with, I think, is the right way, because it’s going to allow some flexibility to deal with this issue, which is very important. I know that the stakeholders interested in genetic testing and genomics are going to be engaging again with the Minister and the Government on this issue once this legislation passes.

I’m going to leave my contribution there, and just say that this is important for the insurance sector, whether that’s those providing insurance or seeking insurance. This is very worthy legislation which modernises our approach, so we commend it to the House.

Just before I call the next speaker, could I note the ACT members are both wearing their badges. I’ll forgive the fact that we’re in a special sitting.

Todd Stephenson: I apologise, Mr Speaker. I rushed down from my office and forgot.

ASSISTANT SPEAKER (Greg O’Connor): I didn’t want to interrupt your sterling words.

Thank you, Mr Speaker. I rise on behalf of New Zealand First in support of the Contracts of Insurance Bill and Contracts of Insurance (Repeals and Amendments) Bill. One of the most important things in any relationship, particularly a business relationship, is trust. What I feel that this legislation will do is change the perception that is out there about insurance companies. In recent conversations with a colleague in the insurance industry, I asked her the question of what is that perception like. Is it getting better? Do people still have this “I hate insurance companies” kind of feeling? And she said, “Well, it depends on their experience with an insurance company. If it hasn’t been good, then it is not a good feeling. They still do not have the trust. If it has been that people have had a great experience or a good experience with insurance companies, then they do not have that negative belief about them.”

I’m very fortunate to have had good experiences with insurance companies, but it doesn’t stop me from being really vigilant when my bills come in. I make sure that I read through them. That is one of the reasons—I think I’ve already mentioned—that I won’t do a monthly payment. I’ll do it once a year so that it makes me stop and take a good look at what I’m signing up for. Unfortunately, a lot of people do not do that, particularly seniors. I have often mentioned my father ringing me to say, “Have you got a minute? Can you do me a favour?” I always knew that it was something about reading the fine print.

I feel that what this legislation will do is it will create transparency. It does outline so many things in the legislation in much more clarity. For example, there is clarity about what is a consumer and what is a non-consumer contract. It gives more clarity on disclosure. It gives more clarity on remedies. It specifically outlines—it has a range—if it’s something that is deliberate versus something that is intentional. You get slapped on the wrist, depending on what it is that you fall under in that scheme. What I’m really thrilled to see is that there is going to be a shift. It may take time, but at least we are making steps. I’m sure that, in time, as we go further down the road, there will be things that we will see that need to be changed, but it does take time, it does take testing, especially with consumers.

On that note, I will commend this legislation to the House. Part of me is kind of going, “Oh, it’s not going to appear on my weekly reading list.” It seems to have been on my list for many weeks. Thank you, Mr Speaker.

This is a five-minute, split call.

Tēnā koe e te Pīka. Tēnā tātou katoa. This is a brief contribution, so I want to start with this: necessity does not beget accessibility, and I think that is certainly true in this case. Insurance is a privilege. It’s such an expensive exercise. I was just listening to my colleague referring to either monthly payments or yearly payments. That scenario is an exception in what I know and understand in terms of insurance, whether it’s housing insurance, whether it’s contents and all of those things. Particularly for whānau Māori, it is not a common thing, unfortunately, though it is a necessary thing.

We note in the discussion the plain language and the importance of having plain language. I’m assuming that that means plain English language. I’m assuming that that is the case, which is an interesting point, isn’t it? If modernisation is true, then I would expect that in the modernisation concept, te reo Māori is another language that needs to be understood and embedded in the way in which we think about language. When I hear “plain language”, I’m hoping they’re suggesting te reo Māori is the plain language, but it is not. Then it’s another expression of the divide—

Ryan Hamilton: Oh!

MARIAMENO KAPA-KINGI: —which is about reo, which—and I can hear somebody moaning; maybe they need to exit the House. But, if you don’t know, then you simply don’t, and therefore you remain ignorant to what I’m expressing. But I’m happy to have the conversation outside this room. I want to make the point that, in this regard, if modernisation is true—and the kōhanga reo and the kura kaupapa mokopuna that are coming through would say to you, if you were to understand te reo Māori, that modernisation in te reo Māori is a real thing. Let’s really be real about modernisation.

This legislation promotes equality between—well, alignment maybe—insurance contracts and other contracts. We’re yet to see whether that is true, because, again, this legislation is relative. It’s relative to the whole—in fact, the previous speech that I took was about residential tax and all of those things. That was a big bill. You know, it’s not transformative, not in this instance. It doesn’t go far enough, really.

Do we feel better off because of this legislation? Not necessarily—not necessarily—so we don’t support it, despite the ideas or the ideology the opposite side of the House carries. It’s simply that they just do not know and understand our reality. Nō reira i runga i tēnā, tēnā tātou e te Pīka. [So, on that note, thank you, Mr Speaker.]

Thank you, Mr Speaker. I’m taking a second call on the Contracts of Insurance Bill and the Contracts of Insurance (Repeals and Amendments) Bill. I want to begin by acknowledging my colleague Lawrence Xu-Nan, who has spoken for us on the first law and, I think, has outlined the nuances with which we’re traversing in this debate. I also want to acknowledge the Hon Dr Duncan Webb, the former Minister who started to work on this legislation last term.

This is legislation that I think exemplifies the outcomes and the changes that we see when a new Government comes in and gives the bills that a previous Government has been working on a new coat of paint—an ideological new coat of paint. We can see that in the Hauraki Gulf / Tīkapa Moana Marine Protection Bill—

Ryan Hamilton: Not relevant.

RICARDO MENÉNDEZ MARCH: —and we’re seeing it in this one. They may think that it’s not relevant, but, actually, this bill did see changes as we’ve changed Governments, and we think that some of the changes tilt the balance beyond just modernising our insurance laws and protecting consumers, to actually undermining consumer rights. My colleague has already outlined the changes in the language in relation to dishonesty and fraudulency—and I see the member nodding, right? So, like, they do know; they’re just being glib—very much on brand for them. I think that submitters were quite outspoken about the challenges that changing that language creates.

Other members have spoken about how “dishonesty” is quite a catch-all phrase that seeks to undermine the rest of the language around, for example, taking reasonable care in terms of responsibility for policyholders. This will actually undermine consumers, and I want to put it into context, as well. While there may be many types of insurance that one can access, as we see more extreme weather events, more and more families will be in contact with insurance companies and will have to make claims and will have to navigate really complex situations, and often situations of distress. When people are in distress and they’re having to provide information, I think that is why, for example, this change of language would have better protected people, because it allowed, I guess, a more nuanced way of operating where if somebody provides information that is wrong and it wasn’t done with fraudulent intent but they may have been facing distress, the previous language would have been far better when it comes to supporting consumers.

Other members have talked about the genetic testing provisions and the many advocates who were calling for a prohibitionist lens as opposed to having a regulatory framework for it. I think it’s worth noting that the Albanese Government recently moved to create a total ban on the use of adverse genetic testing results in life insurance. Mr Speaker, I know we try to avoid straight-out reading, but because I am going to quote from a press release, I am just going to read a couple of the lines on the arguments for it. They were really clear that “Genetic testing can be a life-saving step for members of the community. This valuable technology supports medical practitioners to prevent, diagnose, treat, and monitor a range of heritable conditions, cancer predisposition syndromes, and cancers. No Australian should be discouraged from undertaking testing out of fear it may impact their ability to get life insurance.”

I think that that sentiment should apply here, and for all the assurances we’ve been getting from, for example, the ACT Party, in a previous contribution, actually, there is no guarantee that a regulatory framework will actually end up tilting on the rights of consumers, because part of having regulatory frameworks is that, ultimately, the Government of the day can easily change them around if the entities in charge of supporting those regulatory frameworks are not adequately supported to ensure that that there is adequate consultation. We could end up with pretty perverse consequences, and individuals with resources can then lobby to get the outcomes that they want.

I want to note, as well, that when it comes to genetic testing and the changes in Australia, even the companies were in favour of taking a prohibitionist approach. I think that this should serve as a reminder that, actually, we can move to legislate on the side of consumers, and, yes, the companies can follow in line when politicians are brave enough to actually not allow things like genetic testing to, potentially, be used to undermine people who may have a family history of health conditions and who may be wanting to access this technology for lifesaving purposes. My colleague has touched on other nuances in this legislation. With that, I just wanted to say that we won’t be supporting this legislation further.

I rise to support the Contracts of Insurance Bill and Contracts of Insurance (Repeals and Amendments) Bill in this third reading, on what is a very momentous day for our insurance sector across New Zealand, both for the insurers and the consumers. As the Tukituki MP, insurance has been extremely important for many people across our electorate in the wake of Cyclone Gabrielle. I would just firstly like to acknowledge the Finance and Expenditure Committee members and our chair, Stuart Smith, for helping navigate this important legislation through, and, of course, Minister Bayly for all of his leadership and taking action as a Government to turn this legislation, which has been talked about and considered for over six years, finally into action.

Of course, for me as the Tukituki MP, we did see Cyclone Gabrielle cause a lot of devastation and a lot of people were impacted hugely, and insurance became extremely, extremely important. It is really, really important that we have robust, modern insurance laws. We can’t have people waiting unreasonable times for their insurance. A key feature of this legislation is the requirement of insurers to pay any sums due within a reasonable time. That is really a key part of this: when disaster strikes, people are going through so much emotion and stress and they really don’t want to be having to have the extra emotion and extra stress of having to wait for their insurance, because they just want certainty to be able to get on with their lives.

I just thought that it was quite important to acknowledge some of those communities that still are going through a very, very tough time in my electorate, and some still are dealing with insurance, and that is Pakowhai, Ōmahu, Waiōhiki, Twyford, Joll Road, Puketapu. We do have another member from our area in the House today, Katie Nimon, and we are still dealing with constituents who have insurance issues. Just the other day, I had a mother in my office who was struggling because they wanted to build back their house but the premium on the insurance was just so high. I was in Ōmahu the other day. There were many there that are underinsured. I was in Pakowhai the other day and they’re still waiting to go from a category 2C to a category 1, so many of them there are still facing insurance issues, insurance concerns. This bill is really going to help with creating more fairness, more transparency, which has been touched on a lot within this debate today.

It also shifts the responsibility on to the insurer, which is really, really important, because, you know, when disaster strikes, you don’t want to be thinking about, “Oh, is that insured? Did I cover that? What was involved?” It’s really, really important that there is a lot of clarity within the policies and that people have certainty and that they know exactly what is insured and what isn’t. Of course, it also prevents the denial of insurance. This was a little bit of an issue, and so it is important that we do have these robust laws, which can iron some of this out, and, you know, just ensure that customers aren’t second guessing what their insurance is and what’s covered and what’s not covered.

I think it’s important, as we adapt to climate change and the reality of more of these events happening in New Zealand, that we also need to adapt our insurance laws, and that is why today is very, very important for our insurance sector and for everyone across New Zealand. These changes will also have a really positive impact on our economic landscape in New Zealand, which, of course, is a key focus of our Government, but after seeing so many families struggle and go through insurance issues across Hawke’s Bay, I am really, really proud to commend this legislation to the House today, because I think it is going to make a huge, huge, positive impact for so many New Zealanders.

Thank you, Mr Speaker. It’s good to be able to speak about this legislation today even though the Labour Party will not support it at this third reading. I want to draw the House’s attention, first of all, just to these two documents here—the two bills that now make up this overall legislation, the Contracts of Insurance Bill and the Contracts of Insurance (Repeals and Amendments) Bill. Particular to the Contracts of Insurance (Repeals and Amendments) Bill, clause 169, it says, “The following legislation is repealed: (a) the Insurance Intermediaries Act 1994 … (b) the Insurance Law Reform Act 1977 … (c) the Insurance Law Reform Act 1985 … (d) the Life Insurance Act 1908 … [and] (e) Part 3 of the Law Reform Act 1936.”

One of the very important jobs that this piece of legislation does is to update, amend, and consolidate a whole heap of previous insurance law, bringing it all into one place. It’s a pretty important project—a project that has been a long time in the making and has taken, most recently, two Ministers of Commerce and Consumer Affairs to bring this to the House: the former Minister, the Hon Dr Duncan Webb, under whose supervision the great majority of this legislation was drafted, and then, more recently, the Hon Andrew Bayly, who, following the change of Government, picked up the Hon Dr Duncan Webb’s legislation and amended it somewhat and brought it to the House. It’s very much a project that has gone on across the House.

I suppose, with that, a person might reasonably expect that the whole House might support this legislation. In fact, Labour did support this legislation at the first reading, but by the time it had gone through the select committee process, we were unable to do that any more as a party—my colleague Arena Williams has gone through some of the detail on that. I, however, just want to talk about a somewhat higher level, and that’s to think about who we legislate for. This is something that my colleague the Hon Damien O’Connor said to me once: “We legislate for the margins.” We don’t legislate for the easy cases, we don’t legislate for the mainstream, we don’t legislate for the straightforward stuff, we don’t legislate—I would hope—in favour of the powerful. We legislate for people who need assistance. We legislate for people who find the law puzzling, we legislate for the vulnerable, and typically, when we legislate, we try to legislate in favour of the consumer rather than the company, and there’s quite good grounds for doing that. It is because, typically, consumers as individuals have far less power than the organisations they are dealing with.

In the original version of this legislation, there were a number of clauses in it which ensured that consumers of insurance were protected and were given some valuable protections and some more rights to ensure that they could deal effectively with insurance companies. Unfortunately, the new Minister has walked that back. Now, it’s still pretty good legislation, but the bit where we cannot support it is where he has walked back the provisions that would have supported ordinary consumers—ordinary people who find insurance law hard to follow; ordinary people who are puzzled by contracts; ordinary people who might struggle with reading and writing, might struggle with the day-to-day activities of finance, might be so busy living their lives that they cannot pay attention to the detail. The legislation as originally put forward by the Hon Dr Duncan Webb would have protected these vulnerable consumers. This legislation brought to the House by the new Minister walks that protection back. It’s a real shame.

Actually, it was a telling point from the previous speaker, Catherine Wedd, who, when she stood up to talk about what this legislation did, said it was a good day for the insurance sector. It took a while for her to clarify that she did intend it to cover consumers as well, but first up in that person’s mind was the insurance sector—interesting.

I do want to pick up something else that one of our other colleagues—Mariameno Kapa-Kingi—said earlier on. There’s a really interesting phrase she said: “insurance is a privilege.”—insurance is a privilege. Actually, it is becoming that way. Of course, Mariameno Kapa-Kingi talked in terms of families, of households, with individuals who can no longer afford insurance. That is a real concern for us. We know that, when vulnerable people are stretched in their budgets and are trying to make ends meet, one of the first things to go is insurance. Then, of course, that becomes a real problem when disaster strikes. We do actually have an issue there and we need to have a serious look at it as a Parliament.

There’s another aspect of that which we need to consider seriously as a Parliament—I hope this Government will do it and continue some of the work that has already been done—and that is around looking at ongoing insurance in the face of the climate challenge that is facing us all, the climate challenge that they are walking back from. Nevertheless, we are going to have whole classes of vulnerable people in New Zealand for whom insurance will be a privilege because the places in which they live are vulnerable to climate change.

With that, I urge the Government to consider that issue in real depth. It’s something that’s really important. Having completed this piece of work, flawed though it is now—that’s, I suppose, a good start; it’s just a shame we can’t support it wholeheartedly as we would like to. I urge the Government to turn their mind to some of the real challenges that we are going to face with insurance in this country in the very near future.

I’m very proud to stand to do my final call on the debate for the Contracts of Insurance Bill in this House. This bill—and putting it, you know, long story short—is a bill that is about facilitating the well-functioning insurance markets for both the insurers and the policyholders. This had been commented through the debate before me.

This bill is really about enabling consumers and businesses to be more effectively protecting themselves against risks in New Zealand. That’s the whole point of insurance, which is about protecting ourselves against risk. Here I will give a very, very simple but, I hope, effective example for many of our viewers and listeners on TV, which is that, when this bill is passed, consumers who are the policyholders will no longer have to guess what information they will be responsible for providing to the insurers that is relevant to their insurance policies. This is very, very critical, because, at times of risk, or at times of danger, when we need the insurance to be effective, as a policyholder, we won’t have the time or the energy or the concentration to be able to think about the information that we are providing. When this bill is passed, the onus will be now on the insurers to be asking the right questions, to be asking for the information, and it is for the consumers to provide based on the questions that are being asked. This is a very critical mind-set shift that I hope the viewers and listeners will understand. This bill is about minimising the costs and the impacts, also to the insurers, in the insurance market in New Zealand.

It is a very significant reform, for six years of review and consultation through the different Governments, through the different Ministers, and also select committee members, to consolidate the different views, the perspectives, the changes so that the New Zealand insurance contract laws can be more modernised and aligned with the international jurisdictions around the world. This bill is the collective effort across the House, across the different Minsters, and also the many, many pieces of public and professional feedback that had been provided to the select committee. I’d like to thank the various Ministers, particularly Minister Bayly, for seeing this bill through, and also to all the Finance and Expenditure Committee members and particularly all the public feedback. I fully commend this bill to the House and look forward to seeing the positive impact that this bill will bring to New Zealand. I commend this bill to the House.

A five-minute, split call.

Thank you, Mr Speaker. It’s really nice to be able to have an opportunity to speak on this legislation. This legislation started as a bill that was pulled out of the ballot as a member’s bill by Dr Duncan Webb, and that’s because he had worked on this material for some time and it was a very sophisticated bill. It was then adopted by the current Minister and there have been some changes which the Labour Party is not necessarily that happy about, because the thrust of the bill is to protect the vulnerable consumer, and the changes that the Labour Party are concerned about are ones that erode that principle. That is of concern.

I’ll just take one of those and that’s the issue of delay. Delay is absolutely one of the enemies of the ordinary person, and we’re seeing a lot of this as a theme, actually, out there at the moment. We’ve just been talking about delay as a tactic used by lawyers in regard to the abuse in care claimants, that it can do terrible damage when lawyers get hold of delay, and it can do terrible damage when insurance companies are also in control of when the money gets paid out and they delay. That’s an issue that we need to join the dots on.

The insurance area is one we’ve long recognised as one where people are vulnerable, and we’ve had a duty of the utmost good faith for a very long time. This legislation consolidates a whole lot of Acts and it makes sure that principles that we’ve already had are built on, and, hopefully, the majority of this bill provides that environment. The only reason that the Labour Party isn’t going to support it today is because it could be better. The original bill was better.

I would like to just briefly talk about the addition of the genetic testing issue here. This is a really big issue, and I think there’s probably more that needs to be considered by this House at some time, on this point. There are philosophers that suggest that the best way to organise our society is to think of ourselves as blind in a situation—we don’t know who we are. We could be anybody in this scenario. We could be the person who has Huntington’s and we were genetically tested for that. We could be the person who is absolutely fine. We’ve got to think in terms of our boots, which boots we’re in, how we could structure insurance if we could be either of those people in the system, or our children could be, or our parents could be, and we’d probably want a blind insurance system. We’d probably want one where in fact you didn’t get punished, you didn’t actually let the insurance companies know what the genetic testing was, and that would spread the cost across our society and community in a way that was fairer.

That’s an issue where I can see there’s an intent to make sure that as things happen in this area, we think about them, and we regulate for them. I share Arena Williams’ tentativeness about the support of that, because it is such a big move to leave something unsaid by the House and leave it to regulation. It is a very important thing to note here, because we’re not really speaking to the people viewing this—I’m sure there’s all three of them who are watching the insurance legislation—but we’re actually speaking into the Hansard, and we’re making sure that, on the record, we’re noting issues of concern and issues where perhaps the courts would interpret the legislation in the light of what we say. For me, one of the ones that stands out in this is this very new area where we’re not sure where it’s going, and where, in fact, it could mean that people who are vulnerable end up uninsured, or where companies take advantage of being able to collect information and insure only those where they’re actually going to have a good payout, and, in fact, they’re going to leave the ones that are uninsured for the other system.

We have to be really careful about those things, and I am pleased to see this here, but I do want to just highlight that as an issue that we’re going to have to think about more and relate to other areas of the law that we’re shaping at the moment, where we’re going to have to think really clearly in a changing world, where more information is able to be gathered than ever before, what do we want it to look like, what’s our role as leaders—and at the heart of that is working people in this country. It’s people without capital, it’s the consumer, and it’s the disempowered. At the heart of that, our job is to make sure of it for those people, who we could be in that blind situation. Thank you.

It’s a privilege to see this legislation go through the House and now to third reading, and I’m very proud for New Zealanders and, of course, the Minister who brought it to bear and the great committee which has been mentioned today.

I actually not often get to mention the Regulations Review Committee, which, by all accounts, is largely fairly dry, but it’s got a fantastic chair in the Hon David Parker over there and Jenny Salesa. We actually got to look at the regulation-making power that came through from the Finance and Expenditure Committee with regard to the genetic testing and regulation-making powers and such things as “Henry VIII” clauses and whether there was an inappropriate delegation of power. Actually, with the appropriate mitigations that the Finance and Expenditure Committee accepted, we felt we got the balance right, where, with genetic testing, rather than make a rule, when it’s such a dynamic environment, we’ve actually enabled the Minister to have some discretion and some nuance through these regulation-making powers.

I think we’ve struck a really good balance in such a dynamic environment, which is genetic testing, where we’re not saying the insurers will be able to just eliminate the ability to genetic test, but we’re also preserving the right of individuals to have genetic testing and still have insurance access. That’s a very fluid environment and we’re happy to support this.

Some of the members opposite talked about the Hon Duncan Webb’s bill being better. Unfortunately, in their three years, they didn’t advance that case, despite his 15 amendments at each part. I can say with confidence that he certainly did contribute to the iteration of the committee and by and large, I think, in his heart will actually support much of what we’re doing today. One of the things in the old bill, for example, was that consumers had to disclose any information that might influence a prudent insurer—but who understands that? The left talk about looking after the little people. These bills actually look after the little people and put the onus on the insurance companies to ask the hard questions, and put the onus on them, where it should be. They put it in simple language, and, of course, we mandate that insurance settlements must be paid within a reasonable time frame.

It really strikes that balance between consumer protection and certainty for the market, and, of course, many of you may have forgotten that some of the statutes in the existing insurance legislation are over a hundred years old, like the Life Insurance Act 1908. These are great omnibus bills which tidy up a lot of that.

Hon Dr Duncan Webb: In the Marine Insurance Act, it’s still there.

RYAN HAMILTON: Were you around then, sorry, Duncan Webb? You seem to have a comment there. The most significant changes that this legislation encapsulates and tidies up is around regulation, technological advances, economic pragmatism, the claims process, clear time frames, insurers accept, access, and settlement claims. I commend it to the House.

Kia orana, Mr Speaker, thank you very much. Look, we absolutely support improvements in insurance law, and this legislation, which is the product of both political and officials’ work, is clearly an improvement. I guess our point is simply that this is very much, as the former speaker said, not just a once in a generation opportunity to improve insurance law but it’s the first time that all of our insurance law, or almost all of our insurance law, has been brought together in one place. The Marine Insurance Act 1908 still sits off to one side as a specialist piece of insurance law, but pretty much the rest of it, particularly in respect of how it interfaces, rather than the regulatory side, now sits in this piece of legislation.

Certainly, it’s good to see codification of the disclosure rules, which have kind of developed over time but have never been really clearly or satisfactorily articulated. The idea now that there are different rules for consumers is a good thing, and certainly the onus should, in a modern environment, be on insurers to make sure that they ask the right questions and, where there are gaps, they fill in the gaps and an innocent non-disclosure doesn’t lead to a failure of the entire policy. That is good.

I know that my colleagues who sat on the Finance and Expenditure Committee did a very good job and they made suggestions for improvement, including around the distinction between an insured or a policyholder acting in a dishonest way versus a fraudulent way. One of the challenges with the use of “dishonesty” is that it’s a much more graduated concept, from, you know, “ought to have made an inquiry” at the low end to “positively intending to do something outright dishonest”, whereas “fraudulently” is a clearer term and would’ve been better, but we’ve got to where we’ve got to.

I do want to talk about the remedies for policyholders, because, whilst in my pretty extensive time in practice I saw occasional cases where an insurer would decline for non-disclosure, the greatest wrongdoing I saw was obstruction by insurers of the settlement of a claim in a timely way. They would be continually saying, “We just need to do a few more inquiries, a bit more investigation. We haven’t quite decided what to do with it yet.”, and so you wouldn’t actually know, in many cases, even whether the insurer accepted the claim for months and sometimes even years. Now, that’s utterly unacceptable, and whilst there is in this legislation an articulation of the current law, which is that the claim needs to be resolved within a reasonable period of time, we’ve missed an opportunity. We’ve really missed an opportunity to say exactly what that means.

My own view is, and it was in my member’s bill—still is in my member’s bill, which we’ll get to eventually—was that there should be a brightline, that a reasonable time is 12 months unless the contrary can be proved. It really puts the onus on the insurer, because to simply take a long time whilst the money, essentially, stays in the bank is harmful in many, many ways, and not just financially. One of the things that perhaps this House doesn’t realise is that insurance isn’t just about restoring property; it’s about peace of mind. If you’ve got a business or a home or something else that’s been destroyed, something substantial, and you’re still working through it, the degree of anxiety that that can cause when you don’t know what the future looks like, whether you’ll be financially secure or not, is really, really significant and can be quite destroying.

Of course, the remedy for that is the other thing—again, a missed opportunity. This piece of legislation could’ve said that in consumer contracts there are damages—proper damages, substantial damages—for breach of settling the claim in a reasonable time. At the moment, the courts can and do award damages, but they are trivial damages—$10,000 or $20,000 for what can be real heartache and distress. Interest is mentioned, but, again, not clearly; in a throwaway kind of way.

Of course, the biggest outrage in this piece of legislation is the win that the insurance sector got in carving out exclusion clauses from the Fair Trading Act unfair contract term provisions. We have a framework where insurance contracts are drawn in, in part, into that framework, but exclusion clauses are allowed to be unfair, which makes absolutely no sense. It’s an absolute nonsense.

The other thing I’ll comment on is the consumer business distinction and just the difficulty that that poses for small businesses. There are certainly instances where small businesses face pretty much the same obstacles and barriers of knowledge and complexity that consumers do, and there’s no real assistance for them in this legislation.

Lastly, genetic testing, which at the moment, it’s fair to say, is not a huge problem in New Zealand, but increasingly there is the ability to have huge amounts of information about someone’s health status through genetic testing. This empowers regulations to be made, and I would simply say to the Government: please, make those regulations—make them as soon as possible, because we need to address this. This is one of the things that the select committee did very well: listened to submissions, got on and said, “We do need to do something about genetic testing.”—something that I hadn’t put in my bill, that Andrew Bayly hadn’t put in this bill, but the select committee picked up on it, and that is good process. Make those regulations so that we can protect people’s personal information and make sure that they take advantage of the huge health benefits of genetic testing without putting at risk their health and life insurance. So, it’s better legislation, but not as good as it could be—but what do you expect?

It’s a pleasure to close out this debate in what is often a dry topic but a very important topic indeed. This is the third reading of the Contracts of Insurance Bill and the Contracts of Insurance (Repeals and Amendments) Bill.

The importance of the insurance market can’t be underestimated. It provides an ability for peace of mind, as my colleague from the opposite side mentioned before; the ability for businesses, consumers, and households to share risk; but, also, it provides opportunities, economic opportunities, for those in this sector. I’d like to, again, just acknowledge the work of many into this legislation: the Minister Andrew Bayly, members from the opposite side, the hard-working members of the Finance and Expenditure Committee, and those who submitted on this bill—stakeholders, private individuals, and organisations alike.

This is important legislation. It’s one that modernises contract law for the insurance sector. It improves transparency for consumers and it brings our regulations up to international best practice. What does it do? Well, that has been traversed quite substantially in the House today. For those of you at home, those two of you who are watching online, this legislation seeks to provide policyholders with a range of improved rights and insurance.

Ricardo Menéndez March: Tell us about them.

DAN BIDOIS: One of those, in fact—let’s talk about them, OK?—is around the right that insurers must present policies in a very clear and plain language way. For anybody who’s actually been looking in the insurance market, it is a very opaque and difficult to understand industry, and I think this legislation seeks to make amends for that.

On the opposite side, it provides a range of measures for consumers, mainly around the duty to not make misrepresentations to insurers and to a duty to be fair in presenting the risk to insurers. This is all about making sure that the balance is right around insurers, but also policyholders as well, to ensure that there is an efficient, well-run insurance market for New Zealanders. This is good legislation. I commend it to the House today.