On 14 November 2024, the Contracts of Insurance Bill passed its third reading in Parliament. Following the Governor-General's Royal assent given on 15 November 2024, the Bill has passed into law as the Contracts of Insurance Act 2024 (new Act).
As explored in our previous article, the new Act seeks to provide better protection for consumers, and clarity and transparency for both insurer and policyholder. The new Act also brings New Zealand in line with international best practice, and consolidates existing insurance law, which is at present in multiple pieces of legislation – historically causing confusion and ambiguity.
The new Act will come into force on dates to be set by Order in Council. However, given the significant one-off commitment that will be required on the part of insurers to update their systems, policies and procedures to ensure compliance, insurers are likely to have up to three years to implement the necessary changes.
Further work to prepare the necessary regulations to support the new Act will be required before it comes into force. The regulations are likely to cover a range of matters, including the prescribed form and presentation of consumer insurance contracts, use of genetic information, and interest payable in respect of life insurance payments. These regulations will be developed in consultation with the insurance industry and other key stakeholders.
As well as the new Act, there are other legislative amendments which will affect insurers', and insurance intermediaries', operations and regulatory compliance in the near future, such as the Financial Markets (Conduct of Institutions) Amendment Act 2022. Accordingly, businesses in the insurance sector should begin their preparations for the impending changes sooner rather than later. Our experts can assist with reviewing existing insurance contracts to ensure compliance with the new consumer protection standards, advising on policies and procedures as well as updating compliance frameworks as required by the new Act.
If you have any questions about how the new Act may affect your business, please contact one of our experts below.
