The Insurance Business New Zealand website is reporting that the Insurance and Savings Ombudsman Karen Stevens supports legislation to better protect customers relating to information they disclose to an insurer. The following are extracts from the article (the full article is here).
Karen Stevens says legislation would mean an insurer could only avoid a policy where it could show the non-disclosure was deliberate.
Some cases are clear, where people deliberately leave out information they were asked to provide, knowing that it will go against them. However, in other cases, people accidentally leave out information because they have forgotten, or do not realise it is important.”
The current law requires a consumer to disclose to an insurer all information a ‘prudent underwriter’ would consider important. But, said Stevens: “This is extremely difficult for consumers to understand.
“My concern is that consumers don’t understand the consequences of not providing the information.
However, she said: “Industry self-regulation is not enough on its own. We need to review the law and make changes to stop consumers getting themselves into a situation where they are uninsured and, in many cases, uninsurable in the future.”
Later in the article the views of Insurance Council of New Zealand CEO Tim Grafton are aired. These include the following:
"Tim Grafton, CEO of the Insurance Council of New Zealand, maintained the New Zealand was, in fact, one step ahead on the subject.
So, we have no problem about addressing this issue - indeed we are ahead of the curve. What is important here is insurers' approach and the new Code addresses the issue.”
Tim Grafton's comments are not, in my view, an accurate reflection of the situation.
As mentioned in some detail on this blog (17th of March here) the Fair Insurance Code does not come close to the lead set elsewhere, especially the U.K., with regards to information disclosure. New Zealand legislation based upon the U.K.'s Consumer Insurance (Disclosure and Representations) Act 2012 is where we should start. Insurers in New Zealand have not shown themselves to be trustworthy, and are certainly quite unsuitable candidates for self regulation where so much is at stake for the general public.