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Monday, February 23, 2015

Comments on the ICNZ Revised Fair Insurance Code - Part 3

Some general issues

These issues arise in various parts of the Revised Code. It is useful to keep them in mind while reading the Revised Code, to see how there is a continual stacking of the document with content that favours insurers and puts customers at risk.

Keeping each other informed: As mentioned previously there is heavy emphasis on customers informing the insurer of existing and changing circumstances. This is understandable, as such information is key to the insurer knowing the status of the risk associated with the policy. Consequently, the Revised Code is laden with obligations on the customer to be forthcoming and fulsome about this. There is, however, no equivalent obligation placed upon insurers.

Section 8 of the FAQ accompanying the Revised Code excuses insurers from making an effort to provide lists of required information or summaries of policy wordings. In the absence of suitable lists and explanations customers, who are not experienced with insurance contracts, are being put at risk. The problem is increased for those who aren't familiar with legal documents or are not proficient in English.

What else might customers want to be informed about? How about up to date information on developments in insurance. At one level there is news about insurance determinations by the Insurance and Savings Ombudsman, or the Courts, that change how claims will be treated or decided. At another is reminders of important and sometimes topical items that slide past the consciousness of the general population but is important to insurers: things such as what to do after getting a speeding ticket, or losing a licence, the storage of flammable goods or house maintenance.

General media releases are cheap and convenient but do nothing to inform customers in a direct and personal way. In any other industry keeping individual customers up-to-date would be considered customer service and support, in insurance it seems to be a risky inconvenience and cost.

Statutory Rights: Continuing with past practices there has been an aversion to mentioning potentially inconvenient statutory rights.

One such area of omission has been the Privacy Act 1993. For those unfamiliar with the Act it would be very easy to draw the conclusion that information gathering, accessing, and correcting that information, is controlled by insurers – this is the way it is portrayed in the Revised Code.

Treating you “fairly”: The use of the word “fairly” throughout the Revised Code is bound to cause problems in the future. An insurance policy is a legal contract and, whenever a claim is made, what follows is determined by the legal meaning of the contract. The use of “fairly” is somewhat cynical and could be considered calculated to create a confused mind-set that in some way insurance claims are now about what is fair, and not driven by upsetting legal interpretations. Puffery with dire consequences?

The customer’s best interests: There is no mention in the Revised Code of the insurer's obligation to act in the best interests of the customer.  Where is the commitment to ensuring that, in fulfilling a claim through to completion (e.g. repair or rebuild), the insurer will protect the interests of the customer by ensuring the whole process is efficient, of a satisfactory specification and quality, and does not put the customer to unnecessary delay, expense or stress?

The bottom line: the Revised Code is superficial, creates the appearance of fairness, but does nothing to ensure that the customer is informed, empowered, or protected to any useful degree. The Revised Code is motivated more to stave off any legislation of insurance activity than correcting the shortcomings of insurers and protecting customers.

The next post, on Wednesday, will be the beginning of a clause by clause assessment of the Revised Code.

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