When one thinks of insurance law in New Zealand, one may ask – where do I start and what do I need to know?
This article serves to generally outline the essentials of insurance law in New Zealand in the context of current talks about reform in this area of law.
Insurance law is an area of law that is largely based on contract law, with a natural intermingling with the principles of insurance.
Some relevant statutes include:
- Life Insurance Act 1908;
- Insurance Law Reforms Act 1977;
- Insurance Law Reforms Act 1985;
- Fair Trading Act 1987;
- Insurance (Prudential Supervision) Act 2010.
The Marine Insurance Act 1908 is another relevant statute that, in some respects, sits separately.
These statutes form part of the proposed review of insurance law in New Zealand.
The Fair Insurance Code (FIC) is another important aspect of the governance of the insurance market in New Zealand. The members and associate members of the Insurance Council of New Zealand (ICNZ), of which there are 29 and 3, respectively, agree to follow the FIC. The FIC is a code of conduct developed by ICNZ, stipulating the standards that members and associate members must follow. The most recent version of the FIC is dated 1 April 2020.
The Insurance (Prudential Supervision) Act 2010 (IPSA) defines a contract of insurance a contract that involves the transference of risk and under which the insurer agrees, in return for a premium, to pay to or for the account of the policyholder a sum of money or its equivalent, whether by way of indemnity or otherwise, on the happening of 1 or more uncertain events. This includes a contract of reinsurance.
Information that forms part of a contract of insurance includes an insuring clause, identification of the particular to be insured, and the scope of indemnity; information that is usually within a policy schedule and policy wording. The policy wording specifies the nature and scope of what is covered by insurance and terms and conditions to claims, among other relevant stipulations.
When insurance is placed, the insured has a lawful duty of disclosure in terms of providing material information to the insurer. Expectedly, when the insured falls short of this duty, there are consequences. One consequence is the insurer being able to avoid the policy. Then again, when facts are provided by the insured that reasonably indicate further material information, the onus is on the insurer to ask further questions. For the insurer not to do so could be viewed as them having waived the disclosure requirement.
The nature and scope of the insured’s duty to disclose and the corresponding consequences form part of the review of insurance law in New Zealand.
Generally, insurance brokers act for the insured and, usually, place risk. For their work, they are most commonly paid a commission. Recent developments have caused some uncertainty in this area. Last year, the Financial Markets (Conduct of Financial Institutions) Amendment Bill was brought forth. At present, it is at the second reading stage. The relative uncertainty is brought about by 446O, in that, intermediaries will be obligated to comply with the incentive regulations.  What these regulations are unclear.
Specific types of insurance are illegal and, therefore, have no effect. One example includes insurance intended to cover someone’s liability to pay an infringement fine or penalty in relation to employment and workplace health and safety rules. 
In 2015, changes were made to the Fair Trading Act 1986. One change was making unfair contractual terms in standard form consumer contracts illegal, which applied to a certain extent to an insurance context.  This said, the law acknowledges that there exists terms and conditions within insurance contracts that are essential to offering an insurer protection. In such a context, some terms are not regarded as unfair. 
How this change may continue to affect the insurance sector is something to heed.
This article has touched upon the roots of insurance law. It has also discussed how the insurance tree branches out into several other areas of law.
Modern developments to insurance law and, generally, the insurance sector should be followed with interest.
Copyright Steve Keall, all rights reserved, 2020
 Insurance (Prudential Supervision) Act 2010, sections 6 and 7.
 Financial Markets (Conduct of Institutions) Amendment Bill, 446O.
 Employment Relations Act 2000, section 142V and Health and Safety at Work Act 2015 section 29.
 Fair Trading Act 1986, section 26A.
 Section 26A(3).