New Zealand’s Contracts of Insurance Act 2024 (much of which is similar to COFI intentions) consolidates existing insurance laws across various legislation and case law.

The Act applies to all insurance contracts, although some provisions relate only to consumer insurance and others only to business insurance.  It does not apply to reinsurance.  Contracting out of the Act is not permitted.  The Act creates separate disclosure regimes for consumers (which tend to be less onerous) and businesses, reflecting the similar position now under Australian and United Kingdom law. 

The onus is now on the insurer to ask questions of consumer insureds to obtain the information the insurer requires.  The consumer’s duty is to “take reasonable care not to make a misrepresentation”. 

Business insureds are required to make a “fair presentation of risk” to the insurer.  That requires disclosure of every material circumstances that the insured or insurer ought to know or that will give the insurer sufficient information to put it on notice if it needs to make further enquiries. Non-disclosure by consumer or  business insureds is required to be treated proportionately by insurers. 

Significantly, any relevant information given to the broker is deemed to be passed on to the insurer.  The insurer may have a claim against the broker if the relevant information is not received.  The validity of the insured’s contract is not, however, affected. 

The Act requires an indemnity payable under the policy to be paid within a reasonable time.  Although no fixed time limit is introduced, what is reasonable depending on the time required to investigate and assess the claim and its complexity.

A third-party, with leave of the court, may claim directly from the insurer if the insured is insolvent or dead.

The Act is useful for South African insurance players to have regard to when considering policy wording and amendments , including what may be considered in determining whether reasonable care has been taken. And, in underwriting, how clear and specific any questions asked of the insured are, what  appropriate steps to take when an insured fails to answer a question or gives an obviously incomplete or relevant answer, and how to ensure clarity of communication to the insured of the importance of answering any proposal questions and the possible consequences of failing to do so. 

Contracts of Insurance Act 2024 No 46, Public Act – New Zealand Legislation