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The Contracts of Insurance Bill has been split into two Acts - the Contracts of Insurance Act 2024 and the Contracts of Insurance (Repeals and Amendments) Act 2024 – and become law.
The Acts, which reflect similar reforms in Australia and the UK, will rebalance the insurance relationship in favour of policyholders in order to enhance consumer protection.
In recognition of the extensive changes that may be required to insurers’ systems, policies, and procedures to comply with the new requirements, a lengthy transition period of up to three years is proposed.
Key features
An overview of the Bill as first drafted is available in our Chapman Tripp commentary here. These include diluted disclosure duties for consumers, proportionate remedies for disclosure breaches, notification duties for insurers, adjustments to insurers’ claims duties, requirements that insurance contracts be clear, concise and effective, public disclosure of certain metrics and modifications to the requirements relating to brokers. As the legislation has progressed, a number of clarifications and modifications have been made, including:
- the addition of regulation-making powers for prohibiting or regulating conduct of insurers in connection with genetic testing and clarifying whether an insurance contract is classed as ‘consumer’ or ‘non-consumer’
- the reframing of the threshold for misrepresentations by consumers from ‘fraudulent’ to ‘‘a lack of reasonable care’ in the relevant circumstances
- the express exclusion of reinsurance contracts from the scope of the new regime, and
- imposing an implied term that claims be paid within a reasonable time; and
- removal of the criminal offence for brokers who fail to pass on premiums to insurers.
Next steps
Before the new Acts come into force, the supporting regulations will need to be drafted and consulted on, including in relation to the form and presentation of consumer insurance contracts. This will give industry a further opportunity for input.
If you would like more information on how these changes will affect your organisation or how you might engage in the next consultation round, please get in touch with one of our experts.
