Contracts of Insurance Bill

Thank you, Mr Speaker. I rise on behalf of New Zealand First in support of the Contracts of Insurance Bill in the name of the Hon Andrew Bayly. Now, Mr—oh, it’s Madam Speaker. I’ll let you take your seat, Madam Speaker.

DEPUTY SPEAKER: Thank you.

TANYA UNKOVICH: Currently, Madam Speaker, insurance contracts come under an umbrella of various case law and Acts. There are approximately six Acts, and some of them are very old—some of them are up to 100 years old. It is time now for the area of insurance to be looked at and new legislation put in. Now, this bill has been in process for a while—I believe it’s been here for a little while from the previous Parliament. It’s really looking at a whole lot of areas of which many stakeholders have come forward and said, “Look, these are problem areas.”, and it’s now time to consolidate and modernise this legislation so that it is more in today’s world.

I was speaking to someone the other day who’s in the insurance business, and I was asking her a question about what the perception is of insurance companies. Is it getting better over time? And she said no, it’s not. The relationship isn’t as good, and, often, the feeling that someone has about an insurance company is their own personal experience of an insurance company. Now, I’ve personally been very lucky, but many people have not and their experiences are as a result of some of these antiquated bits in the current legislation. Maybe by putting this legislation through, that perception will change, but it will take time. However, it does need to start.

In this current legislation, many issues are looked at, such as disclosure remedies, and more instances have been looked at in the Finance and Expenditure Committee. Now, whilst I read in the first reading and am now reading in this reading, I wasn’t part of the select committee, so I will talk a little bit about that later on, but there were some interesting areas on genetic discrimination that I will touch on.

One of the things about insurance is that it is often something that we put our head in the sand about. I do know that I myself once just let policies lapse, and then before I knew it, I was paying for something that I didn’t really need to pay for, which is why I personally decided I’ll just pay a lump sum every year. That way it is one way that I can look at the policy—it makes me look at the policy. Many people don’t; they just pay something monthly and things just get put aside until one day you go, “Wow, this is what I’m paying for.” A lot of people get a little bit sucked in that way. My father was one of them. I know other seniors and other people who maybe aren’t as inclined with their finances, and they get a little bit—well, they put their head in the sand. Every now and then, I’d get the phone call from my father. You know, “Tanya, I need you to look at something.” I always knew it was looking at some of the fine print. Now, hopefully, with this legislation, things won’t be as difficult and as intimidating.

One of the areas, like I said, was about disclosure, and it will look at and simplify the insurance process and it will stop any miscommunication between the policyholder and the insurance company. What this legislation does is it looks at what is called “consumer insurance policies” and “non-consumer”—consumer being more domestic and non-consumer being more of the business type of policies. It is important during disclosure that the consumer does his or her best to not misrepresent when they are actually applying for insurance and for the insurance companies to fairly represent the risk to the customer.

Now, one area that has also been spoken about and written about in this legislation are remedies. There will be more certainty now on remedies if something occurs, whether it be an innocent mistake in disclosure, whether it be reckless, or whether it be deliberate. The level of remedy will depend on what scale of misinformation or error has been done in the actual policy.

There’s also something else that is of interest, and that is that the bill introduces penalties for insurers who fail to act in good faith—sometimes they might delay in processing the claims. That is something that I’m really happy to see, because I know people who have struggled and waited a long time for their claims to be either looked at or paid out. That will be addressed here.

Now, just very briefly, I’ll talk about the genetic discrimination, which was brought up in the select committee. This is something that is used by people to find out whether they are genetically disposed to any illnesses, like some forms of cancer, Huntington’s, various sorts of illnesses. What is going to be addressed is to ensure that insurers do not somehow take advantage of this. We don’t want people to be discouraged from having these tests, because it is very important for many. This is something that has arisen in the select committee process.

Just in summary: fairness, clarity, common sense, and it is time to relook at this legislation and bring it into the modern day. On behalf of New Zealand First, I commend it to the House. Thank you.

The next call is a split call. I call Hana-Rawhiti Maipi-Clarke.

Tēnā rā koe e te Pīka, otirā tēnā rā tātou e te Whare. E tū ana ahau hei waha i ngā kōrero a Te Pāti Māori i te rangi nei. E tautoko ana mātou i tēnei o ngā pire. E mihi ana ki te Minita nāna i kawe mai ki roto i te Whare Pāremata.

[Thank you, Madam Speaker, indeed greetings to all of us of the House. I stand to give voice to the statements of the Māori Party today. We support this particular bill. I acknowledge the Minister who brought it into the House of Parliament.]

Mō ō mātou whānau e whakarongo ana i te kāinga, ko te ngako o tēnei pire [For our families listening at home, the essence of this bill, the purpose of this legislation is to] reform insurance contracts law and to streamline and modernise the existing insurance legislation framework in Aotearoa. The primary aim of this bill is to ensure that insurance contract law effectively facilitates well-functioning insurance markets for both insurers and the policyholders. It seeks to empower consumers and businesses to adequately protect themselves against risk, while also minimising costs and impacts on insurers’ willingness to provide insurance here in Aotearoa.

The current framework governing insurance contractors is fragmented across six different Acts, some of which are over a hundred years old. Consolidation and modernisations of these laws are deemed necessary—a view shared by industry stakeholders and consumers and groups alike. Various reviews, including those conducted by the Law Commission, have highlighted longstanding issues with insurance contract laws, which this bill aims to address. This bill also addresses the issues of unfair contract terms by removing insurance-specific expectations from the Fair Trading Act 1986.

I roto i ngā mahi o tēnei pire, e tautoko ana mātou i tēnei pire i roto i te mana motuhake. [With respect to the actions of this bill, we support this bill in our own autonomy.] This mandate for clear wording allows whānau to gain a better understanding for their insurance policies, which will lead them to have more informed decisions.

I roto i te kaupapa o te mana ōrite, e tautoko ana Te Pāti Māori i tēnei pire. [With respect to the subject of equality, the Māori Party supports this bill.] The removal of expectations from the Fair Trading Act 1986 will promote equality between insurance contractors and other types of contracts, all of which will benefit consumers.

I roto i te kaitiaki o tō mātou whakapapa, ka tautoko Te Pāti Māori i tēnei pire. [With respect to the protection of our genealogy, the Māori Party supports this bill.] Only 30 percent of Māori have house insurance, compared to the national average of 48 percent. Furthermore, only 40 percent of Māori have contents insurance and only 20 percent have health insurance—compared to the national averages of 64 percent and 29 percent, respectively. This bill will make insurance more accessible and fairer for Māori. Nō reira e tautoko ana mātou o Te Pāti Māori i tēnei pire. [And there we, of the Māori Party, support this bill.]

Thank you, Madam Speaker. I rise to speak on the Contracts of Insurance Bill on behalf of the Green Party. Understanding in terms of this particular bill has quite a long history that spanned multiple Governments. It started off as a review by the Ministry of Business, Innovation and Employment around insurance contract law, which then was adopted as a Government bill, and then as the Hon Dr Duncan Webb’s member’s bill, and now as a Government bill again.

What we do have, then, is three different versions of this bill. One of the things when we were going to select committee is that a certain provision that was put in the original bill by the Hon Dr Duncan Webb was not found in this updated version of the Government bill. The Green Party has two main issues around this which we have Amendment Papers on. We’ll be very interested to see if the Minister would consider these amendments in order for the Green Party to support this bill.

The first one is around health and genetic testing, which is, granted, very important from the some of the submitted that we heard as part of the Finance and Expenditure Committee. I think, for me, what’s really, really important here is the watering down from what is considered “fraudulently” to “dishonestly” when it comes to the contracts or in terms of some of the elements here. I think this is a really important point because what we have seen is that it gives insurance companies potentially more flexibility to void or to even challenge some of the claims that consumers might be making when it comes to that particular differentiation. What we wanted to see before when it comes to “fraudulently”, that was really important from a mens rea perspective; a really important element of whether the consumer knowingly is misleading or didn’t include certain information in an attempt to create fraud or be in that kind of situation.

However, there are definitely good elements of this bill and I think some of the speakers have highlighted that one of the key elements of this bill, among many others, is the distinction between what is considered a non-consumer insurance contract and a consumer insurance contract. I think that particular distinction that we see throughout this bill is something that is really important and it also allows that level of clarification.

Now, there are a couple of other submitters that submitted on various elements of the bill, and there are two additional issues that I would like to bring up and I will be very interested to hear the Minister’s advice or clarifications around this as part of the committee stage.

The first one is around the fact that the original bill was introduced and considered a stronger penalty around what is going to be for brokers, whereas it’s no longer in this particular bill in the same way. This has to do with specifically when a duty on a broker to notify the insurer if the premium is not paid or pay interest when a broker failed to notify the insurer. I know that, within the bill, it talks about the fact that they wanted to do it in a way that claims cost from the broker as opposed to putting almost a criminal charge on the broker, but I think the idea is that we see a lot of duties and a lot of obligations on the insurer. I genuinely do think that in terms of the broker element, it hasn’t been as tight in terms of rules and regulations when it comes to brokers.

The second thing is also understanding that this bill tries to consolidate various elements of insurance law. However, one of the things that came out really, really strongly during the select committee stage is around the changes to the Marine Insurance Act 1908—particularly when it comes to clause 167 of this bill, which I would like to discuss more on during the committee stage. Now, the marine insurance is a very specific section of the insurance contract, which then led to an amendment to clause 7 of the of the bill, which changes from “contract of reinsurance” to “non-consumer” contract. However, I do not think that it goes far enough. Again, I’m looking forward to the committee stage where we can discuss this bill in more detail.

Thank you, Madam Speaker. It’s great to be able to speak on the Contracts of Insurance Bill, this being an omnibus bill. I’m growing quite fond of omnibus bills because they do a lot of things productively, which we’re all about. In fact, this bill seeks to reform, I think, seven different Acts and cuts across the Life Insurance Act 1908—and the member Hana-Rawhiti Maipi-Clarke mentioned that that Act is actually 100 years old, so it’s amazing today that we’re actually updating an Act that’s over 100 years old; it was actually 1908—the Law Reform Act 1936, the Insurance Law Reform Act 1977, the Insurance Law Reform Act 1985, and the Insurance Intermediaries Act 1994. But it doesn’t stop there; in fact, there are two more that it actually implicates. It also amends the Fair Trading Act 1986 and the Financial Markets Conduct Act 2013. It’s a really important bill that modernises those things, as has been well spoken about.

I would like to pay some tribute to the Hon Duncan Webb, who had a member’s bill to recognise and update some of this outdated legislation. I would say he made some good contributions. We had a constructive Finance and Expenditure Committee. As you can see through this, I think the House is largely in support, bar three little things, which I’ll speak on shortly. Fortunately, we had the great Minister Andrew Bayly, and he took the bill to a whole other level and it’s going to be fantastic. You can see from the stakeholders that are involved that private insurance, the consumer, and insurers are going to be happy with the outcome of this, because it’s really important that it simplifies and modernises a lot of what can be a very complex situation.

A couple of the key, quick things are that this will shift the onus of disclosure duties to insurers rather than on private individuals, who may not know that they had to disclose umpteen loads of information. It makes it clearer for them, and it puts the responsibility on the insurer. A bit like open banking, it’s going to make it more competitive for consumers to be able to choose different insurance companies, with greater clarity and greater transparency, and that’s really important. Going forward, insurers must also use simple terms to make sure their policies are easier to understand, and they will also have to pay customers within a reasonable time frame. I know the member Catherine Wedd can talk from personal experience through the cyclones that have affected her territory and the importance of insurance companies paying up in time and in full and in appropriation.

You might ask what’s wrong with the 100-year-old Life Insurance Act 1908. Well, there’s a few quick things I’d just touch on as to why we need to update this. In fact, they do translate across all the other bills, too. One of the first ones is transparency, which I touched on. It’s really important for the insurance policy to be transparent to consumers so they know what they’re buying, because insurance, as we know, can be very complex and goes across property, assets, and vehicles. Life insurance is very complex and can be very convoluted, and when people pay premiums, they want to ensure that they are getting what they’re signing up for. Of course, regulations have changed a little bit since 1908, too, so it’s important that this bill is more reflective of the modern economy which we’re living in.

The third reason is technological changes. Obviously, we didn’t have the internet in 1908. We had snail mail, which we actually don’t even use a lot today. This bill reflects a lot more modern-day technology. The economic outcomes are quite different, too. You’ll appreciate that the wages people got, the inflation rates, the bank standards, the lending, the whole insurance ecosystem, was very different from what we have today.

Finally, the claims process—and this is perhaps one of the key elements of this bill—it’s to make the claims process easier but also clearer for insurers to accept, for consumers to access, and for the settlement of those claims. One of the things which we settled on was that insurance claims are paid within a reasonable time frame, and that was a little bit of a sticking point. Some members wanted to try and land on a definitive date, but the advice we got back was that “a reasonable time frame” does give flex, because there is a lot of complexity when setting payment terms and payment times.

The other key point of difference—and the Green Party member Dr Lawrence Xu-Nan touched on it before—was “fraudulent” to “dishonest”. We landed on “dishonest” because it was more in keeping with other countries around the world, in terms of Australia and England. I do have to say it was a bit odd that the Labour Party actually wanted to go to “fraudulent” when, in the past, they actually wanted to reduce the prison population and were a little bit soft on crime. Here, they were actually wanting to make it a criminal activity and embed the word “fraudulent”, but “dishonest” actually softens it and gives a little bit more grace, so that if someone makes a dishonest mistake, it’s not going to affect the whole insurance premium and throw the baby out with the bathwater. That’s why we thought it was a much more nuanced response.

At the end of the day, the consensus was largely supportive of where we landed. Genetic testing was a new one, and it did delay the settlement on this piece. We had to talk to the industry a little bit more about it because there’s, obviously, incredibly new technology in the space of genetic testing, and it’s a double-edged sword. People can have their genetics or their DNA analysed and actually have a better sense of where they are in the health spectrum, but, conversely, there was fear that insurance companies having that visibility might actually penalise or lift premiums or not insure at all. We wrestled with that, and where we landed was, we thought, a nuanced response where we’ve left it open for regulation-making powers to the Minister.

All in all, I think we’ve landed on a very good, a very consensual bill which reflects modern society, reflects a fairly broad view across the House. And, with that, I commend it to the House.

Thank you, Madam Speaker. As I’ve said before, this is the second-best insurance bill that’s been introduced to the House this year, because I did have a cracker, and I was surprised that, as the member Ryan Hamilton was speaking, the Minister who’s sponsoring this bill was heckling him from behind. I do want to say that you don’t often get a call from a Minister, particularly when you’re not in the governing party, but the Minister did call me and said, “About that insurance contracts bill, it’s awkward, because I’ve got one that I want to introduce as well.”, and he sort of said, “Would you mind just withdrawing your bill?”

I know you’ve got to be careful what you say in this House, so I’ll quote: I said, “Bugger off.”, and he was not pleased. But with the way this place works—

Hon Andrew Bayly: I wanted to work collaboratively with you.

Hon Dr DUNCAN WEBB: Don’t worry—I’ve still got plenty to say. But the way this place works is that, if the Government introduces a bill and bumps it up the Order Paper and reads it for the first time, mine is put on ice. But don’t worry—

Hon Andrew Bayly: But I did change it—I did change it.

Hon Dr DUNCAN WEBB: You did do some changes. You’re right, Mr Bayly—well done! You did do some changes, and they were not very good.

I’ll tell you, Mr Bayly, here’s the one that really gets to me—I’m going to go straight to the one which I find perplexing, and that’s the amendments to the Fair Trading Act. The Fair Trading Act has got a part of it which allows the Commerce Commission to identify and prohibit unfair contract terms. Now, for pretty obvious reasons, insurers have hated that since it came in, and they got a free pass from when it was originally introduced. That’s never been right. It’s always been the case that they should be drawn into the unfair contract terms provisions. They’ve always said, “Oh no, insurance is different. It’s complicated. We don’t want things like exclusion clauses and the amounts of the premium and things like that to be able to be ruled unfair.” The draft that I introduced into this House said premiums, sure, I understand that—you can’t argue about premiums: it’s a yes/no question.

Why should exclusion terms be themselves excluded from the unfair contract terms regime? Let’s just think what that means for a minute: that there can be an exclusion clause which an insurer uses in its form contracts which is unfair, yet the Commerce Commission is not allowed to look at it. It beggars belief to me that the Insurance Council of New Zealand would come to select committee and say, “Don’t touch our insurance clauses. We want the right to have unfair exclusion clauses.” That to me is a nonsense. But, Mr Bayly, don’t worry—I’m here to help. I have many Amendment Papers drafted. I’ll try to get them in early so that your officials can adopt them all, and I won’t even mind if, like Minister Paul Goldsmith, you adopt them and put them in your own name just so that you look like a clever little Minister.

The other thing I want to talk about is delay. One of the biggest problems in insurance is delay. Whilst the Minister did pick up some of my work and require the insurer to settle a claim within a reasonable time, it simply doesn’t go far enough. He’s chosen a list of factors to determine reasonable time, and that’s one way to go, but I’ll tell you what it doesn’t have and what it desperately needs, and that is teeth. It needs real damages, because in the Tower case in Christchurch, an architect sued Tower, who had wrongly refused a claim for six years, and that court awarded—because that’s the way the law of general damages works—$20,000 for six years’ delay and having an unlivable house for that long, whilst the insurer sat on millions of dollars for that period of time.

There are two things we need to address in this bill when it comes to the committee of the whole House stage. One is making it clear that interest on claims that are wrongfully denied, or the value of them, is included as damages, particularly in consumer contracts, because if someone’s going to be out of their house—and Christchurch has seen every possible permutation of this—doesn’t have insurance for the rental they’re having to pay, and yet is being denied the value of hundreds of thousands of dollars of repairs, they deserve to be compensated for that.

The other thing is genuine damages—damages that count for the distress and anxiety that goes along with that—because the fact of the matter is that that kind of distress in a very significant insurance claim can be life-changing in a very negative way. I’ve seen relationships break up and all kinds of heartache, and even if you do come out of it at the other side, certainly that’s six years or more in many cases—there’s still cases from Christchurch that are outstanding—which can cause real heartache indeed. The third thing that I’ll help you with, Mr Bayly—

Hon Andrew Bayly: No, no—don’t need it.

Hon Dr DUNCAN WEBB: I’ve heard you say that you don’t need any help before.

Hon Kieran McAnulty: Oh, he needs help, all right.

Hon Dr DUNCAN WEBB: —yeah, he does, Mr Kieran McAnulty—is good faith, because, once again, insurers don’t like good faith being thrown up. Good faith cuts both ways. Usually, it’s been used against the insured—“policyholders”, in the language of the bill—to say, “You didn’t tell us the truth. That’s a breach of bad faith.”, but we need to make sure that we make it abundantly clear that good faith is a duty owed by the insured and the insurer, so that when an insurer comes to assess a claim, or even to deny a claim—which they’re entitled to do in many situations—they should do so fairly, honestly, promptly, and taking into account the interests of all the parties.

For far too long, insurers in these very important contracts have taken into account only their own interests—only their own balance sheets—and they’ve paid lip service only to what goes on outside of their own companies, and many of the better insurers will admit they’ve had to up their game here. That has meant a culture of delay, denial, and deferral, and that has caused problems across the industry. I think they’re doing better now. Perhaps my MP colleagues from the Hawke’s Bay or Auckland can tell us how they’re doing up there, but we absolutely need to make it clear what that good faith is. It’s not just at the outset of the contract—it’s not just when you enter into it—but it’s at renewal. The point where it matters the most is in claims handling, because, to be perfectly honest, no one takes a lot of notice of their insurance arrangements until they get to the claims point.

There’s plenty more to go through in this bill, including some of the language of it. I’m not sure why we’re still using the language of “general average” and “pro rata claims”, and why we can’t use a bit more plain English. But that kind of amendment—

Hon Andrew Bayly: What’s wrong with pro rata?

Hon Dr DUNCAN WEBB: What’s wrong with general average? I mean no one in this House, I imagine—well, a few people in this House understand what general average is. But we’ll fix that up when we come to the thing.

The genetic testing material, while it is a useful improvement—and that is something which wasn’t in the original bill. It is a really good example of where some ability to make rules to make sure insurers behave in a way which is consistent with the public interest—because, of course, we know with genetic testing that it can reveal genetic dispositions to illness or disease, and if we have to disclose that, we might not go and get those tests. The flip side is that knowing that information means we can take preventative action, protective action, which will greatly enhance the health of our population. So that’s a good initiative—

Hon Andrew Bayly: Are you going to explain about your tie?

Hon Dr DUNCAN WEBB: —and I’m sure that the submitters on that will be very pleased indeed. But, Mr Bayly, as you’re yapping away there in the background, if you want to give me a call and have a yarn, I won’t tell you to bugger off. Thank you very much.

I rise in support of the Contracts of Insurance Bill. I’d just like to do a shout-out to the Finance and Expenditure Committee and to our wonderful Minister Bayly for navigating this very comprehensive piece of legislation through, because it’s really going to make a difference modernising our insurance laws. I can speak from personal experience when it comes to insurance, having undergone Cyclone Gabrielle in our region, where there were record numbers of insurance claims across Hawke’s Bay, across the East Coast, and obviously across Auckland in the Auckland Anniversary weather events as well.

These were two of the largest insurance events in New Zealand’s history. The most recent statistics that have come through show that insurers have settled 112,746 claims out of 118,037 claims. This amounts to approximately $3.8 billion—about $4 billion, once everything is settled. These are record numbers and there are still communities that are in difficult positions where they have not got their insurance claims yet, and particularly there are some communities where they were under-insured.

This has been a really emotional and tiring process in Hawke’s Bay and it’s still really very raw for a lot of people. I would just like to acknowledge the Hon Dr Duncan Webb. As he rightly pointed out, insurance can be a very emotional and stressful time for people and causing a lot of heartache. That brings me to acknowledging the communities that are still going through that heartache in Hawke’s Bay. I would just like to acknowledge Pakowhai, Waiohiki, Puketapu, Fernhill, Ōmahu, and Central Hawke’s Bay.

Just a few weeks ago, I visited the Ōmahu community. Ōmahu is a community in Hawke’s Bay which was completely flooded by Cyclone Gabrielle. The Ōmahu Marae has been the strength of the community, and many people there have been living in the marae since those February floods last year. Just recently when I visited, the last three families were moving out of the marae into their homes. I think this just makes it very real as to the position that we still are in in Hawke’s Bay, with families still out of their homes and still moving back to temporary accommodation, actually.

I visited a beautiful lady there in Ōmahu who had had her house completely flooded and she had some temporary accommodation moved on to the property by the Ministry of Social Development, and yet her property was under-insured, so she can’t do the repairs on that property. She has to look every day at that house that she used to live in, still smeared in silt, and that’s a really, really difficult time.

I suppose what it does—and this brings me back to this insurance law—is it really, really highlights the importance of having robust, modern insurance laws, which, when disaster strikes, we can put these insurance laws into action. I think the member spoke earlier about our Māori communities being more vulnerable when it comes to insurance, and we did see that in Cyclone Gabrielle. I can’t speak more positively about these very good insurance laws that we are going to be passing through today and how important it is to have full cover to ensure that you have a very good, robust insurance policy in place. It’s very relevant to Hawke’s Bay, it’s very relevant to the East Coast, and, of course, Christchurch and Kaikōura, and especially when we’ve had those natural disasters.

Many of my constituents, during this time, did contact me a lot with insurance claims, and we had to navigate through those really emotional processes and those emotional times, and so I’m really, really happy today to be speaking to the Contracts of Insurance Bill, which is going to update the laws. The purpose of this bill, as has already been spoken about today, is to obviously make the law more effective, but it also enables more protection for the consumers to protect themselves against risk and minimise those costs and impacts on insurers’ willingness also to provide insurance in New Zealand, so it works for both the insured and the insurer, and this bill is going to provide a single, modern framework for that. As we’ve already heard, it is an omnibus bill, which is going to tie a lot of those bills into a modern framework.

Under this bill, there are many, many changes that it makes, but I think one of the key elements that will be really good is the requirement for insurers to pay any due sums in reasonable time. The “reasonable time” is key, because this is a significant change, because when disaster hits—as we’ve already heard, if you lose your home and you lose your business—you want to be able to get some certainty and some clear time lines around insurance. That is absolutely imperative. It’s emotional enough when you’ve lost everything and you’ve lost your home and your livelihood and then you’re having to go through the stress of insurance and obviously wanting to be paid out within reasonable time. People want to be able to move on with their lives quickly and a better framework around insurance will ensure that that happens, so this is going to be a very welcome change in the legislation, that reasonable time framework.

The bill also shifts that responsibility towards the insurers to ask the right questions and ask specific questions so people know what is required in their policy and how much cover they essentially will have, but also the detail of that cover. I did see a lot of that in the aftermath of Cyclone Gabrielle. People were a little bit uncertain around what was covered and what wasn’t covered, because potentially they just didn’t have that clarity. This bill is going to iron out some of that and ensure that—you know, the change aims to stop the unfair denial of claims and ensure people receive the support they need, which is really important. By fostering a more robust insurance market, the bill will not only protect consumers and the people who suffer loss but it will also provide insurers with the certainty they need for that comprehensive, affordable coverage.

This balance is crucial for rebuilding and strengthening our economy. As Ryan Hamilton spoke about earlier, providing competition and a more competitive environment is also very, very important for resetting our economy as well, and so this bill will bring immediate benefits and set a precedent as to how we handle natural disasters moving forward. It’s about ensuring fairness, transparency, and efficiency in our insurance system and especially as we need to adapt to climate change. After seeing so many families struggle across Hawke’s Bay, I think that having a robust, modern insurance framework is going to be really, really positive for New Zealand. With that, I commend this bill to the House.

Thank you, Madam Speaker. It’s a pleasure to rise to take a call on this bill, the Contracts of Insurance Bill. It’s a good start, but it doesn’t go far enough—but it is a good start. I think we can all agree that insurance should be clear and insurance should be fair.

Glen Bennett: Clear and fair.

REUBEN DAVIDSON: I’d like to—thank you; yes, very fair. It should be very fair. Speaking of very fair, I’d like to just reference the earlier speech from my fellow member the Hon Duncan Webb and really acknowledge the work that he’s done in this space too. Now, Mr Webb—member Webb, the Hon Duncan Webb—is a person who knows a lot about insurance, both being a lawyer but also being from Christchurch. Let’s not lose sight of the fact that Christchurch underwent huge pressure and enormous insurance pressure as a result of the Christchurch earthquakes.

Now, there’s one thing that I want to speak about specifically in here—well, there’s several, but there’s one thing that I want to start with—and that is around the possibility of policy holders making a mistake. Let’s be fair, we all make mistakes; we’ve spoken about several that we’ve spotted already in this bill; so, you know, we do all make mistakes. I think one of the things that’s important to point out is that, as amended by the Finance and Expenditure Committee, the bill does away with “fraud” and uses the less clear “dishonesty” standard. I think it’s probably a good point to talk about what the difference between fraud and dishonesty is. In my books, fraud would be telling someone, for example, that they’re going to get a thousand bucks a fortnight and a sweeping tax cut, whereas dishonesty would just be adding the words “up to” in front of that. There is a difference between fraud and dishonesty. I think being less clear about that definition really is a risk because it means that genuine mistakes could be met with much, much harsher penalties.

I also think it’s important that if we’re talking about the fact that insurance should be clear and fair, we also accept that insurance isn’t simple. I point members to a NielsenIQ report that has found just recently in August that only a third of insured homeowners are confident they know what damage to their home would or would not be covered by insurance after a natural hazard event. Now, that’s one-third of New Zealanders having a reasonable understanding of what coverage or support they can expect after a natural hazard event—and we’re seeing an increasing number of natural hazard events—and 26 percent were confident they understood what could be covered for damage to their land. Those are not big numbers, and that should be of concern to us all.

What should put us at ease is the Minister Bayly saying that under this bill, there will be no more guesswork for consumers. Well, thank you, Minister Bayly. That’s a big promise to make, and I can see you’re looking at me saying, “When did I say that?”—I can see the member’s looking at me saying, “When did he say that?” That’s been reported in the New Zealand Herald as recently as 2 May this year, Minister Bayly, so it’s good to see that you’re guaranteeing there’ll be no more guesswork for consumers as a result just of this bill. As far as insurance goes, what I would like to suggest is that if the Minister is looking for an underwriter for policies such as this, he should look no further than the aforementioned Hon Duncan Webb, who does know a lot about insurance and could potentially underwrite some of the insurance policy and some of the remits that you’re trying here.

I also think—as I finish—that, in talking about clear and fair insurance, reasonable time for settlements is a big part of that. There were 650,000 insurance claims in Christchurch as a result of the 2011 earthquake sequence, and there are still homeowners and property owners waiting to settle some of those claims. I think we should be concerned that this bill walks back the requirement for insurers to settle claims quickly. I think that is a mistake. I don’t think that’s clear; I don’t think that’s fair. I support the bill. There’s much more to be done, Minister Bayly. Duncan Webb is the man to see—he won’t always give you that rude greeting. Thank you.

They just can’t help themselves, can they? They have to get in a dig about how much they hate tax cuts, even with inflation at all-time lows and tackling the cost of living crisis. Had to get in a dig about how much they oppose hard-working Kiwis getting the money they deserve. This is a bill that was designed for those hard-working Kiwis—those ones that are benefiting from that tax relief—because this is about sorting out insurance contracts for them. I just want to touch on maybe three or four points as we think about this.

Maybe they’ve lost the plot; they’re just in this mentality—over the other side—where they just have to argue everything and oppose everything out of principle. Here we have a Minister that’s doing a great thing, putting a bill through that, on the one hand, they wanted to claim credit for because they thought of it first; on the other hand, they’re opposing because it’s not what we need. I’m baffled by what it is that last speech was meant to cover.

One of the key principles going through this—and it’s exactly what Minister Bayly was speaking about. If you read the context of that speech that was reported back in May, it is about making insurance contracts easier to understand. It’s about using plain language, everyday language, that when mum or dad rang up to get their house insurance, their contents, their vehicle, maybe life insurance—whatever it might be in that particular instance—using language that they can understand. There won’t be many Kiwis that have claimed to have read and understood every little bit of fine print in maybe their home and contents policy.

Using everyday language that people can understand is really important, but more than that, it is about moving the onus from the consumer to the insurer themselves. That principle that says, “Well, look, we’re not the experts in insurance when we ring up to insure a car. Actually, the insurance company is.” The responsibility to ensure that they have the information they need to enact that policy must sit with them, it doesn’t seem reasonable, nor does it seem fair, to hold against someone the fact that they didn’t know exactly which technical bit of information may or may not have needed to be provided in that instance.

There are some very tragic examples, instances, of policies being refused or having to be challenged about whether or not they would be paid out because a bit of information wasn’t provided which doesn’t actually—perhaps in the case of one that I read was around a life insurance policy and the information that was missing was completely unrelated to a tragic accidental cause of death. But it was used as a clause to get them out of that. This says, “Actually, if the insurer wants that bit of information, they need to pose those questions to the consumer at the time so that they can go and get that language.” They know what they need. They can be the one to go and use that. Of course, the other aspect there about timely payments and just ensuring that consumers, when they are entitled to that claim, will get paid out in a timely fashion.

Now, the second bit that was of interest to me was the bit around genetic testing—around “genetic discrimination”, as it’s called. This was a new issue that came up in the select committee process and I haven’t heard a huge amount of discussion around this, but the bill does go into some detail. Now I’m comfortable with where the committee landed in their recommendation of effectively leaving the door open that in future it could be done. That maybe we’re not quite ready to go there yet—some countries have, some haven’t. We need a bit more information, we want to learn more about this, but it leaves it open to future Ministers and there can be questions about wanting to ensure the appropriate safeguards are in place.

As I read section 4, as I look at clause 86, particularly 86B, which goes through the regulations of how this can be done, when the Minister can approach the Governor-General, I’m satisfied that the appropriate safeguards are in place at that moment, particularly when you read, through 86C, the need to consult the Financial Markets Authority, the need to consult those that will be impacted by any change in this regard, to ensure that it’s not going to unduly prevent insurance companies from getting the information they need. Equally, we want to ensure we’re safeguarding people’s privacy and their right to hold on to some of that medical information.

Considering that, I do commend this bill to the House and maybe just finish with Kris Faafoi—quoting him—congratulating Minister Bayly for his support and commitment in modernising insurance law—

The member’s time has expired.

Thank you very much, Mr Speaker. I’m pleased to be able to take a call on this. The previous speaker, Tim Costley, said he was baffled. Now, those of us that know him are not surprised by this, but he seems confused as to the Labour Party position, so for the sake of him and the clarity of the House, I’ll spell it out real simple. This bill has come about because of the work of the Hon Dr Duncan Webb, who, I think it’s fair to say, knows more about insurance than anyone else in this House, and that is because before he came to this House, he was a professor of law and he represented countless people who were having issues with their insurance companies after Christchurch.

Now, through that experience, Dr Webb saw ways in which policyholders were not being treated fairly by insurance companies, and upon coming into Parliament he sought to correct that and, through a member’s bill, used his experience and expertise to come up with a proposed law that would’ve evened out the ledger. The Minister of Commerce and Consumer Affairs has come in, said, “That’s a good idea, but it goes too far for us, so we’ll take this on and we’ll water it down.” That is where we stand. Of course we support the bill, because it’s better than the status quo, but it’s entirely fair and reasonable to point out where the bill was going to go and now isn’t, and the consequences of those decisions.

The Minister has made changes that allow things to occur to the disadvantage of the policyholder. If the intent of the bill was to improve the protections of the policyholder and the intent of the bill, as many Government speakers have said, is to make it a better experience for the policyholder, why would they make these changes? They actually go counter to what they’re saying. As Reuben Davidson pointed out, the change from “fraud” to “dishonesty” opens up a massive, ambiguous loophole that would allow a genuine mistake to be accused as dishonest and therefore thrown out. It’s a much higher bar to prove that it was fraudulent behaviour than it is to prove dishonest behaviour, and if this goes through as is proposed, some people that made genuine mistakes will miss out on coverage because of the wording of one word.

Now, that could be fixed. It was proposed; it’s been watered down, but I hope the Minister reflects on that and, at the committee of the whole House stage, considers the amendments that will be proposed by Dr Duncan Webb, because if we are true in our intentions—as has been stated today—that we want to protect consumers, then that change will need to be made.

Some speakers have spoken about the difficulty that people have had dealing with insurance companies and getting an answer, be it acceptance or be it rejection or whatever, in a timely fashion, and the importance of that. The fact is there isn’t a single region in this country that hasn’t had a significant event, be it a natural disaster or a weather event, hit them in living memory. Everyone has been affected by this, every region, and no one can say that they won’t be in the future. You cannot guarantee that you’ll be immune from the impacts of a natural disaster, be it flooding or an earthquake or whatever. Insurance touches all of our lives, and if we are going to be true to the statements that are made in this House and we want to make sure that claims are settled and completed in a timely fashion, why did the Minister water down the proposals that were in Dr Webb’s bill? I think that’s a question we should consider. In whose interest is this amendment working? I don’t believe it’s in the interests of consumers.

As Dr Webb pointed out, why on earth would they want to water down the protections that were proposed to allow the Commerce Commission to look over the exemptions that can be included, to make sure that they’re fair and that they’re not solely in the interests of the insurer. They’ve taken that out. What is there to be scared of there? The Commerce Commission can look at something; if they think it’s fine, they say it’s fine, as they do in most other areas, and if they’ve got a concern, they raise it and they work through it. Why on earth wouldn’t you want that there? Whose interest is that change working in?

Now, the fact is that the insurance industry in this country is absolutely crucial. If it weren’t for them, we wouldn’t be anywhere near as advanced in our thinking around managed retreat or around climate adaptation. In fact, the insurance sector has done more work on climate adaptation than this Government, and they’re concerned about the trajectory of this Government, because this is an issue that we cannot overlook and ignore. If people are concerned about insurance premiums—they’ve gone up 20 percent this year—they’ve got to recognise that insurance premiums are linked to risk, and if the Government is going to walk away from its responsibility of climate adaptation and investing properly in the likes of flood protection, etc., we should all expect higher premiums. That’s a fact. The insurance companies are the ones that have, in many respects, led the conversation in this regard.

It’s important that the contracts that people enter into with insurance companies are fair. Dr Webb’s bill would’ve definitely achieved that. The Minister’s bill does to some degree, but if the Minister is open-minded and wants to listen to someone of Dr Webb’s expertise and experience and accept his amendments, then this bill will be even better.

Just responding to the accusation, if you like, that the good work of Dr Webb’s has been stolen, my understanding—and correct me if I’m wrong, Minister Bayly—is that bill supposedly never got off the ground. He sat on it for years and years and years, and when our Minister of Commerce and Consumer Affairs said that he wanted to pick it up, they said, “For goodness sake, you know, you’re going to have to change some things, because premiums, under Duncan Webb’s proposal, will go up.” Correct me if I’m wrong, but that’s what our Minister of Commerce and Consumer Affairs got right with his changes here, and he’s doing a great job. He’s what we call one of the “omnibus Ministers”, being a Minister of Statistics, Minister for Small Business and Manufacturing, and now he’s modernising the insurance law to protect Kiwi households.

I wasn’t on the Finance and Expenditure Committee, but Dr Webb now wants to put up all these amendments and waste time. Looking at the recommendation from the select committee report, can I just leave you with this thought? “The Finance and Expenditure Committee has examined the Contracts of Insurance Bill”—i.e., Minister Bayly’s bill—“and recommends by majority that it be passed.” So, without further ado, I commend this bill to the House.

The question is, That the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.