Review of insurance contract law - options paper: quick submissions

Kate Sheehan

What is your feedback on the disclosure options? Which option do you prefer and why?

Consumers/Insureds generally do not understand what informations needs to be disclosed to an insurer unless specific questions/information is requested. In particular, this applies to medical/trauma cover issues. Insured's are generally not medically qualified and so the only way to ensure that all relevant information is provided is for all medical information to be provided to the insurer for the insurer to decide on what basis cover can be provided/underwritten.

People often forget health incidents and specific details. Sometimes a conversation that has been mentioned in passing to a GP has been noted down on a patient file, or unknowingly a required follow up or test (blood pressure, blood test, liver function, etc) hasn't been completed. There are a thousand different ways 'non-disclosure' can occur. A completed application form accompanied by GP/medical notes is the only true way to ensure full medical disclosure occurs.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

The Fair Trading Act is important as it prohibits unfair contract terms in standard form contracts. This is more of an issue from an insured/consumer's point of view rather than an insurer's point of view. It think that the Australian approach (Option 1) is preferable in that it would tailor generic unfair contract term provisions specifically to insurance contracts/terms. Option 2 would just increase costs/premiums for insured's/consumers. Option 3 to completely exempt insurance contracts/terms is not desirable from an insured/consumer's point of view.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

All of the Options presented would assist insured's/consumer's understanding of insurance policy wording. Options 1 and 3 are in all likelihood going to be the most practical- which is to provide a short summary and plain language/wording in insurance policies.

Any other general feedback?

Section 9 of the Insurance Law Reform Act 1977 does not cause problems for claims made policies. In summary, if this was changed to exempt claims made policies, this would result in an absurd or farscial position for an insured/consumer. Section 9 affects 'claims made' insurance policies. A 'claims made' policy only responds to claims notified to the insurer during the policy period. A claim notified outside this period is not covered. Professional Indemnity insurance is a 'claims made' policy (as well as many other policies - e.g. Directors & Officers Liability and Statutory Liability). It is common for there to be delays in notification of claims and specifically circumstances that may give rise to a claim. Most often this is due to the insured not knowing they had to notify a circumstance. There is a serious lack of clarity in defining a 'notifiable circumstance,' this having been the basis of numerous legal cases. Example: The insured is currently with Insurer B, however they have a claim which falls within a prior period with Insurer A. Insurer B declines the claim due to it being a 'known claim or circumstance' and Insurer A declines the claim because the policy has expired, leaving the insured without any coverage for the claim. Currently, Section 9 prevents this from happening by allowing for the insured to be covered by Insurer A as long as the delay has not caused the insurer to 'suffer prejudice.' Therefore, both the insured and the insurer are protected from harm. Section 9 currently gives protection for late notifications. Section 9 means an insurer is unable to decline a claim for late notification unless that delay has caused the insurer prejudice. What would the proposed changes mean? The Law Commission proposes amending Section 9 so that it does not apply to late notifications made after a policy expires. Without the protection of Section 9, delays in notification can result in claims being declined by insurers, leaving insureds in a situation where they may end up with no insurance cover. If the changes to Section 9 were to occur, it would also make it more risky for anyone (insureds) to change insurers. Due to the common occurrence of late notifications, many insureds may consider it safer to stay with the same insurer to avoid the risk of a claim not being covered. This will effectively remove competition from the market and result in higher premiums/costs to insureds. It has been argued that insurers are disadvantaged by Section 9, as they may have a claim brought years after an event, for example, making it difficult to accurately calculate reserves. Simply stated I do not believe the application of Section 9 is problematic for insurers of 'claims made' policies. The law as it stands is necessary in order to maintain protection for the insured within reasonable bounds for the insurer and to maintain a competitive market from the insured/consumer's point of view. This is also to protect the insured and ensure that there is cover available for claims made later on in time.

Your organisation

Kate Sheehan Lawyers

In what capacity are you making this submission?

business

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Consumers Option 1 - Truthful and Accurate answers to Insurers questions Requirement. The "reasonable person" concept is not understood by consumers and is still open to misinterpretation. For example, does this require a consumer to make further enquiries that a reasonable person would make?

Businesses Option 3 - Equal to Consumer Option 1. 80% of NZ Business is small/medium and our Not for Profit Section is very large, consequently should have the same standard as Consumers.

Remedies Option 1.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 1 - Remove the insurance exemptions from the FTA. There is no reason why insurance contracts should get special treatment as compared to other contracts.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Miscellaneous:

Insurer deemed to know matters known by its representatives - Status Quo;

Exclusions with no casual link to loss (s11 ILRA) - Status Quo;

Failure to notify claims within time limits (s9ILRA) - Status Quo;

Third Party Claims for Liability Insurance Money - Status Quo;

Duty of Utmost Good Faith - Should apply to Insurers Equally as to Insured's, should be codified;

Consolidation of Insurance Statutes into One - YES.

Any other general feedback?

Key Changes I am Concerned About:

1. Duty of Disclosure - should be Truthful and Accurate Answer(s) requirement. "Material Fact" currently can be anything an Insurer decides it to be;
2. Section 11 ILRA - Should be left alone. It is well understood and fair. No Change;
3. Section 9 ILRA - Out of Time Claims. It is well understood and fair. No Change;
4. Utmost Good Faith - Should apply equally to the Insurer. Codify.

In what capacity are you making this submission?

individual consumer

Tony Dench

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 2 is preferred.

The general approach of a principles-based duty (reasonableness) is preferable and aligns with the approach taken in other legislative and regulatory reform in the insurance sector. Suitable advice from a Financial Adviser would continue to play an important part in assisting the consumer's understanding of the product, the disclosure requirements and the importance of providing honest and accurate information to the insurer.

Whilst the more prescriptive nature of Option 1 could create greater certainty for both the consumer and the insurer, the additional time and cost is considered likely to outweigh the additional benefit.

Considerable time and energy is spent by advisers explaining the importance and relevance of disclosure and we believe that there are much better claim outcomes through intermediated advice, where there has been thought, consideration and discussion.

It's vital for confidence and trust between consumers with insurers.
Afterall, there is considerable faith and trust in a relationship where many parties are giving an insurer money to pool the risk with others, so that if something happens to any one of them, that the insurer will pay out the agreed level of cover. When this relationship is too skewed in favour of one party over another (which it arguably is currently is for insurers over consumers), it's prudent to make change.

We would stress though that a core part of insurance is financial strength of the insurer. This strength comes from the insurer being able to vary the terms based on particular risk factors. We don't support any move to reduce this discretion for we fear that this would lead to unintended consequences such as less comprehensive policies, higher prices, and less choice of insurer options.

Sometimes criticism is made on insurers who decline a claim based on non-disclosure when the specific non-disclosure was made on a condition which was unrelated to reason upon which the claim was being made. We support the review of insurance contract law to minimise this continuing to occur.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

We support Option 2. The key basis of insurance should remain that actual and real risks should be able to be assessed and conditions imposed which may be seen as 'unfair' such as a significant loading due to health history. This protects the basis of insurance. We see that insurers in the life and disability insurance area have worked hard to improve the language used in contracts, with some having the plain English tick.

Perhaps though there are areas of general insurance and some outcomes from the natural disaster claims in the last several years that do indicate some improvement is needed in these policies.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

All of these options make sense. This would be a useful way of helping customers to make an informed choice by providing relevant information in plain terms to allow them to better understand the nature of the contract. SHARE advisers use comparative qualitative analysis as part of their advice process in the life and disability insurance area. We understand that it is less easy to compare in the commercial fire and general area.

However, we need to be careful to ensure that too much emphasis is not put on this for it can lead to insurers manipulating and altering contracts to enhance ratings, rather than focus on the intent and philosophy of the company and their culture and conduct.

Suitable advice from a Financial Adviser will continue to play an important part in assisting the consumer's understanding of all of these areas.

Any other general feedback?

General view. SHARE is a nationwide network of more than 70 financial advisers supported by a further 70 staff across 23 offices providing advice on Insurance, Investments, Mortgages. Around half of SHARE advisers are AFAs with the balance being RFAs. All SHARE advisers operate under the SHARE brand and SHARE currently provides policies, processes and procedures for advisers to follow. SHARE supports the intermediated advice model and it is likely that SHARE will apply to become a licensed Financial Advice Provider under the Financial Markets Conduct Act with all SHARE advisers becoming Financial Advisers under that licence. We fundamentally agree with the outcomes being sought as outlined in the Options paper and see this as an opportunity to further enhance consumer understanding of and confidence in the insurance market. Our sector is currently absorbing a number of legislative and regulatory changes that have been delivered very well in a considered, phased and measured manner through extensive consultation with industry stakeholders. Nonetheless, for those affected, this has added to costs and has created a significant distraction from effectively managing their business and ultimately serving customers. Further regulation, delivered in a relatively short timeframe, risks overwhelming the sector and out-stripping some participants� ability to implement the required changes effectively whilst continuing to meet our customers need for quality advice. We are happy to discuss this in detail and happy to also offer our significant experience to MBIE should they need additional adviser perspective and knowledge.

Your organisation

SHARE NZ Limited

In what capacity are you making this submission?

business

Lynda Harris

What is your feedback on the disclosure options? Which option do you prefer and why?

Disclosure of information to insurers
We support Option 1: Change the law so that you would simply have to answer insurer questions truthfully and accurately.

We believe Option 1 is the only one that gives consumers clarity and certainty about what is expected of them. Option 2 leaves the consumer to guess what a 'reasonable person' might think or need to do, so it does not meet the following objectives of the review:

• insurers and people getting insurance are well informed and able to transact with confidence
• interactions are fair, efficient, and transparent
• consumers are protected.

In addition to Option 1, we support: Have lighter consequences for innocent failures to disclose information (but retain serious consequences for fraud, deliberate lies, and reckless non-disclosure).

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

We support Option 2: Remove the insurance-specific exemptions but change the unfair contract terms rules in the Fair Trading Act so that it is easier to understand how the rules apply to insurance contracts.

We believe Option 2 supports greater clarity and certainty, because it focuses on helping consumers understand how the laws about unfair contract terms apply to insurance contracts.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

We support ALL options. Together these requirements would greatly improve consumer understanding.

Require plain language insurance policies

Plain language needs to be a foundational, non-negotiable requirement. Indeed, it will be impossible to fulfil the objectives of the review without it. Many insurers in New Zealand and internationally already have plain language policies, proving that it is entirely possible to produce a plain language contract that is legally sound.

Insurers who refuse to use plain language are, in our view, in breach of fair trading practices and their moral responsibilities to their customers. Complex, unclear language can lead to consumer queries, complaints, and disputed claims. Having to seek clarification and dispute claims disadvantages consumers — and it compromises both the reputation and the efficiency of the insurance industry as a whole.

We recommend that the legislation:

1. require that insurance contracts demonstrate specific plain language techniques
2. point to resources and guidance such as the FMA's Guidance Note on Effective Disclosure (see http://www.fma.govt.nz/assets/Guidance/141201-effective-disclosure-guidance-note.pdf) and the Write Plain Language Standard (available under a Creative Commons Licence)
3. require regular random audits of insurance contracts against internationally accepted plain language criteria, such as the Write Plain Language Standard or the WriteMark
4. include effective consequences for non-compliance.

The Insurance Council of New Zealand is currently working with Write to create a low-cost scheme for member companies to get a plain language review of their documents.

Require core policy wording to be clearly defined

If core policy wording is written well in plain language, it will provide consistency across the industry and benefit consumers. Agreeing on the core policy wording will mean insurers will have to agree on a common understanding, removing subjective and inconsistent interpretations of insurance law.

Require insurers to provide a summary statement

Consumers will benefit from snapshot summaries that capture the intent of all, or significant portions, of the contract. If it is difficult for insurers to summarise their own policies, the consumer is surely disadvantaged. An unwillingness to include this requirement for a summary suggests that insurers are unwilling to unravel their complex wording — a necessary first step to providing a summary.

Require insurers to work with third-party platforms

We believe this would be an excellent move that would create transparency and require a common vocabulary (as for the core policy wording above).

Require insurers to disclose key information

In the interests of transparency, and for a contract that expects good faith on both sides, we suggest this option is vital. At present it appears that the balance of information shared is weighted heavily in favour of the insurer.

Any other general feedback?

We are making this submission as advocates of clear, accessible language that empowers consumers to make well-informed choices. We agree with all the objectives of the review. We hope that the changes to insurance contract law will meet these objectives without compromise.

Your organisation

Write Limited

In what capacity are you making this submission?

business

Brooke Hollingshead

What is your feedback on the disclosure options? Which option do you prefer and why?

The preferred option by the New Zealand AIDS Foundation is option 1, on changing the law to simply require insurer questions to be answered truthfully and accurately. While this may make the application process longer, it puts the onus on the insurer to ask what is relevant to a decision, and merely prompts individuals to disclose further as an when required. This would make the process much fairer and more transparent. We worry that option 2 places excessive burden on the individual to decide what needs to be disclosed and could lead to non-disclosure or false disclosure cases due to lack of clarity on what could be considered reasonable. We are also concerned that if insurance providers access medical records more regularly than they currently are, that this would increase cases of misrepresentation that could affect coverage, could undermine the doctor-patient relationship, and that it would place undue pressure on doctors.

We support efforts to have lighter consequences for failures to disclose information. People living with HIV (PLHIV) are required to disclose their HIV status, and sometimes required to disclose treatment adherence, CD4 count, viral load and medical records to insurers, which we understand is necessary to determine whether coverage is approved and premiums. There is still significant stigma and discrimination experienced by PLHIV from healthcare facilities, wh?nau, partners, colleagues and the general public. This can lead to hesitancies around disclosure, and fear on how this information is recorded. It is important that if the insurer is required to collect this sensitive data, they must also be required to safeguard it and there should be regulations in place for this. However, the consequences for not disclosing can be excessively harsh, especially when requirements to disclose are not made sufficiently clear by insurers. Our concern is that if PLHIV do not disclose their status so that they can get coverage and this is found out while making claims on issues not relevant to their HIV, that all policies are cancelled, and monthly payments are not refunded. This creates a level of precarity in their lives, when for example they may own a home and have mortgages but do not have the security net that is encouraged with such purchases. A system which makes it so unlikely to be covered by insurance if you do disclose your HIV that you consider committing fraud by not disclosing it is not a good system. Disproportionate remedies for non-disclosure therefore seem unforgiving, especially considering the alternative is that PLHIV are un-insurable.

We are concerned that some applications for insurance include questions around likely exposure to HIV, and whether high-risk behaviour has been practiced. We are concerned about the relevance of these arguments to decisions made on coverage, and that they may be discriminatory. In the era of combination HIV prevention, these questions do not take into account advances made regarding safe sex with pre-exposure prophylaxis (a once-daily pill taken by HIV negative people to stop the transmission of HIV), and the news of U=U (undetectable = untransmissible, where PLHIV with undetectable viral loads cannot pass on HIV). The relevance and importance of such disclosure requirements are not communicated clearly by providers, which also need to be addressed.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Most PLHIV have no access to health or life insurance due to significant barriers and unfair contract terms, which we worry are based on outdated understandings of HIV and have led to incorrect measures and pricing of risk. All life and health insurance providers currently exclude coverage of any costs in relation to HIV, HIV disorders including AIDS, and any medical conditions that arise in any way from HIV infection. Other life insurance products such as Income Protection, Permanent Disablement, Trauma/Critical Illness have not been made available to PLHIV. Some policies have outright exclusions that they will not pay out on a life policy if the death occurs as a result of HIV or AIDS. Furthermore, when life insurance is offered to PLHIV (with the exclusion of covering HIV-related illnesses), it is on limited terms (5-7 years) and with a higher premium. Compared to Australia, the United Kingdom and the United States, New Zealand offers the shortest life insurance terms. In the United Kingdom PLHIV can now access terms up to 25 years.

We note that for some providers, HIV is the only health condition to have an exclusion, with insurance being made available to people with diabetes, prostate and lung cancer, and heart disease, some of the biggest killers in New Zealand. We believe the inclusion of HIV here is a disproportionate inequity and discrimination, and stems from an outdated understanding of HIV from the 1980s and 90s when PLHIV were a risk to insurers because they were going to die. Thanks to medical advances in treatment, PLHIV now have life expectancies on par with people not living with HIV and can lead a long and fulfilling life, with a 2017 study published in medical journal The Lancet finding that a 20-year-old infected with HIV after 2008 and on long-term antiretroviral therapy could be expected to live to 78. HIV should be treated as a long-term manageable condition alongside all others as it does not present an increased risk of death, yet instead insurance providers still regards it as a deadly killer. They are allowed to conduct this discrimination due to their exemption from unfair contract terms under the Fair Trading Act, and their exemption from anti-discrimination rules in the Human Rights Act. We believe insurance providers should be required to provide cover for PLHIV in the same way that they cover other people living with a manageable non-life-threatening illness, rather than being allowed to simply deny coverage.

The preferred option of the New Zealand AIDS Foundation is therefore option 1, to remove insurance specific exemptions to the unfair contract term rules in the Fair Trading Act, as it would remove some of this ability of insurers to discriminate. We understand and hope this would bring insurance companies under greater and much-needed regulation by the government. We are concerned that if option 2 is chosen, there will not be sufficient clarity on what is considered unfair, how this decision would be made, and who would make the decision, with the ability to discriminate and not provide PLHIV with insurance still being an option.

Furthermore, most life insurance policies have a condition that they only cover HIV that has been acquired 'occupationally' or 'accidentally', limiting coverage to transmission by blood transfusion, medical procedures, incidents in registered hospital or surgical care, or through violence. HIV transmission through sexual activity or non-medical drug use is therefore not covered. We are concerned that this reproduces a narrative of there being a good HIV where individuals are innocent and undeserving of the condition, and a bad HIV where individuals have knowingly practiced high-risk behaviour and therefore are more deserving. The language use of accidentally acquired HIV is applied selectively here and leads to problematic conclusions that sexualised transmission or non-medical drug use is intentional.

The NZAF believes that the current system with its exemption from unfair contract terms causes an imbalance in the rights and obligations to the contract that works against PLHIV and in favour of the insurer. It is also not a reasonable protection for the insurer due to the significant advances in health and treatment. We know it causes detriment to the insured party to the contract, with insurance coverage regularly being denied to PLHIV.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

We support initiatives to introduce requirements for insurers to present policy information clearly and would love to see all options as requirements for insurance providers.

Navigating the mainstream insurance market can be complicated for PLHIV, as there are a range of barriers. While no data has been collected in New Zealand, in 2017 the UK National AIDS Trust identified several of these, likely to be similar to those faced in New Zealand, including: difficulty in navigating the mainstream insurance marketplace; privacy concerns and; the application process itself, which can be stigmatising and discriminatory. This is on top of the issues mentioned above about products that are not fit for purpose, having high premiums and short terms. PLHIV often access life insurance through insurance brokers who have a greater knowledge of the insurance industry and the ability to negotiate directly with a number of insurance providers, which again comes at an added cost.

Of concern is that some insurance providers have no publicly available policy wording regarding HIV exclusions, and therefore it is only through application that individuals can be aware of what is covered through their being denied insurance. While we believe option 5 and the requirement to disclose key information is important, it is important that HIV exclusions are included here as key information, as otherwise it still might not require insurers to disclose. A further concern is with option 4, and that insurers may not pass on their obligations around disclosure to these third-party platforms.

Any other general feedback?

There are estimated to be about 3,500 PLHIV in New Zealand. There is a real demand for insurance among PLHIV that is currently able to be denied due to discriminatory practices and exemptions from unfair contract terms. In the NZAF PLHIV Need survey, over half of the participants in the survey ranked tackling exclusions from insurance in the top two issues that would make a positive change in their lives. Regardless of the exclusions and exemptions and whether these will continue, insurers should have a duty to not use stigmatising language in their forms and policies, which is currently widespread relating to types of HIV transmission.

Your organisation

New Zealand AIDS Foundation

In what capacity are you making this submission?

other

Other capacity

Community organisation

Anonymous

Any other general feedback?

Re: The proposed change to Section 9 of the Insurance Law Reform Act of 1977. The law as it stands is necessary in order to maintain protection for the insured (within reasonable bounds for the insurer). Without the protection of Section 9, delays in notification, which is quite common for there to be delays in notification of claims and specifically circumstances that may give rise to a claim, can result in claims being declined by insurers, leaving us (the insured) in a situation where we have no insurance cover. What is the point then of taking out an insurance?

Your organisation

Anonymous

In what capacity are you making this submission?

business

S & A Cogle

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 1: Change the law so that you would simply have to answer insurer questions truthfully and accurately. In addition to option 1 or 2: have lighter consequences for innocent failures to disclose information (but retain serious consequences for fraud, deliberate lies, and reckless non-disclosure).

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2: remove the insurance specific exemptions but change the unfair contract terms rules in the Fair Trading Act so that it is easier to understand how the rules apply to insurance contracts

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Require plain language insurance policies, Require core policy wording to be clearly defined, Require insurers to disclose key information.

Any other general feedback?

Recommendations for urgent attention: - Change the law to require insurance companies to comply with the Privacy Act, Human Rights Provisions and the Fair Insurance Code and their own policies - Set up an independent authority to oversee the insurance industry especially with regard to the Fair Insurance Code, Human Rights and Privacy Principles - Greater powers for the Privacy Commissioner, Human Rights Commission and an Independent Insurance Ombudsman (not funded by the insurance industry) to act on breaches of law and policies in an efficient timeframe -Full access for claimants to the Insurance Complaints process and Insurance Ombudsman for cases over $200,000 without needing permission from the insurance companies

In what capacity are you making this submission?

individual consumer

Other capacity

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

I support Option 1 but all three seem more reasonable than the status quo.

Consumers vary widely in their understanding of relevant information. This option would be more fair because it makes the terms of the insurance more clear to those buying it, and puts more responsibility on insurance companies to make sure they have the information required. It would help to make consumers aware of factors that insurers consider to increase risk, and may also encourage them to look at how to reduce this risk. Developing consumer understanding is a positive thing.

In the current system insurance companies are using non-disclosure to avoid claims even when it has no relevance. It is important that the people that need to claim insurance when something goes wrong are able to, and this change would significantly reduce the number of disputed claims. I believe the benefits of protecting consumers outweigh the cost of increase in application time and premium rises.

Also insurers should definitely be required to inform of the duty to disclose, and be clear in what third party access they are using and when. If it is something that they are going to rely on in their evaluation of a claim it is critical that consumers understand that.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

I support any change from the status quo but prefer option 2 - rely on generic unfair contract terms provisions. Insurance policies should be subject to the Fair Trading Act's ban on unfair contract terms. Insurance is the only industry that's exempt from this ban. When buying a policy consumers are essentially relying on trust and this change would ensure consumers will receive cover that matches their expectations.
Cost of premium increases worth it for fair contracts for all.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Insurance policies should be written in plain language and the cover provided should be clearly defined. I believe in recent years some insurance companies have made an effort to do this. However comparison between policies/companies is still not easy. A third party comparison platform would be a good way to achieve this.

Any other general feedback?

I am currently being given the run around by my own insurance company, who are denying a car insurance claim because they cannot contact the person at fault. This is unfair to me because (as written in your review document) I, the insured, have no control over this and will have to bear the consequences. They have made very poor efforts to contact the person at fault (they'd obviously rather not pay the claim) and it has made me realise how broken our insurance system is. The 'peace of mind' that they sell you is truly false advertising, as my experience dealing with insurance companies has been almost as traumatic as the event itself. They take your money for years in the good times, then when you are at your most vulnerable, having suffered loss, they will do their best to avoid claims. I believe myself to be a fairly privileged member of society, and I hate to think how these companies are screwing over people in more difficult circumstances than myself. The options I have chosen above will no doubt be used by the insurance sector to increase premiums but I believe that ultimately consumers will benefit from more fair insurance. Transparent, higher premiums from the outset is preferable to wasting your money by paying premiums over long periods of time and then finding out you are not covered.

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Ito answer am strongly in favour of Option1 as it is virtually impossible for the insured party to know everything the insurer may think relevant Yes it might mean more time involved for the insured filling in the forms, but it wouldn't be very difficult for insurers to design a clear set of questions and notes to answer. I have no problem with the option addition to have lighter consequences for failures to disclose information that doesn't include fraud etc. and think this would be a necessary addition to option 1.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2 is my preference to clarify the rules for both sides, however I suspect the wording of such rules may be difficult.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

There has been a move by insurers to write plain language policies including what is covered or not covered over the recent past which I support. A summary statement would be very helpful especially to people new to insuring using products new to them. If only a key information statement is made some of the very relevant information may be left out.
If it can be done, a comparison website would be good similar to the ones used for electricity pricing, but there would need to be controls or caveats put on the information that the whole policy documents need to be available for separate comparison to the information on the website, which would of necessity need to be limited.

Any other general feedback?

There needs to be more price transparency around premium increases year on year. It is not good enough to just say it is due to rising cost pressures when the inflation rate has been so low over the past years. More understanding around just what is involved would be better. In the case of medical cover there are often very large increases in premiums when there is very little regard for past claims history in assessing the risk and these can be rather ageist.

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

they make it so difficult to understand and make a claim

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

to make thing clearer to understand and stop ripping everyone off

Your organisation

Anonymous

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

I prefer option 1. I think insurance companies shouldn't be exempt from unfair contract terms rules in the FTA. I attach a story I wrote yesterday about HIV/Aids. Insurance companies have been allowed to keep unfair provisions - these ones have no rationale. Please see this story on newsroom.co.nz
https://www.newsroom.co.nz/@business/2019/06/27/654370/why-are-insurers-still-discriminating-against-hivaids

Your organisation

Anonymous

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Find it difficult to differentiate between options 1 and 2 Accurately especially in the context of income protection or life insurance is difficult to define
question such as Have you ever been treated for depression or anxiety Does suffering anxiety symptoms aged 11 count You may not even remember What does treatment mean You may answer the question accurately as far as your memory determines but still not technically correct
I like the potential of reasonable person but still has pitfalls who is a reasonable person To make the significance of nondisclosure clear you would need to be asked very specific questions ie Since age 20 have you ever taken medications or received psychological counselling ( other than by GP ) for depression /anxiety please describe any consultations / incidences that you are unsure of . Now I think if that was applied the reasonable person test if you didn't answer it truthfully no disclosure might apply

With regarding medical records use I think this has huge pitfalls

The medical records are not written for interrogation by insurance companies they are written for the management of the patient so often have information that is not appropriate to be shared with third parties As a gynaecologist I have written in the records sensitive personal information in a form of code that I understood

It is not enough to ask the patient if their records can be shared with insurance companies as they have no idea what is in them
Why are we trying to reinvent the wheel the uk law has described non disclosed information as relevant only if deliberately omitted

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

No opinion

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Prefer option requiring plain language

It is a cop out to say that complex policies can't be rewritten into plain language If that is indeed the case then the complex policies are beyond the understanding of the people reading them by definition

All questions should be written such that a person with the reading ability of a year 10 student should be able to make sense of it and there should be a clear section on what can lead to non payement of a claim

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 2 with the addition of requiring Insurers to use third parties so that all the information required by insurers is available but avoids the consumer inadvertently missing something. Keep it fair to both the insurer and the consumer

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2: remove the insurance specific exemptions.....
It would make insurance policies clearer and easier to compare across various companies. Consumers and insurers would have more certainty and clarity how the contract terms apply.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Plain language, core policy wording to be clearly defined and working with third party comparison platforms such as consumer NZ would be better for consumers and require insurers to be more transparent about what they do and do not cover as well as exclusions/ exemptions. Even if insurers breakdown the costs for each core element that they are insuring for so that costs and insurance elements can be compared across various companies.

Any other general feedback?

Making the insurance industry more accountable in general will be better so that there is clarity from both an insurers perspective and consumers.
Any changes to make sure that insurance policies are easier to compare and check value for money would be fairer for consumers.

In what capacity are you making this submission?

individual consumer

Geoffrey A Cole

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 3 is preferred In addition when it comes to house insurance how about using consented building plans and specifications as an information source. This is especially so in a new build. Many home owners have no clue about building materials & techniques.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2 is preferred. The change in the method of assessing premiums for house insurance is a rort and no more than scaremongering. It is grossly unfair. For example: Data gathered from satellite radar measurements reveal an accelerating rise in sea level of 7.5 cm from 1993 to 2017, which is a trend of roughly 15 cm (6 in) over 5 decades. We have pot holes in some of our roads deeper than that.
Furthermore, because my house insurance premium now costs me over 8.5% of my NZ Superannuation I enquired about obtaining quotes for having an excess of $20,000 or $50,000 in order to lower the impost. The insurance company was not remotely interested. Customer centred? It would make a good Tui advert.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

I would like to see all 5 of the options you are considering introduced.

Going back to House Insurance it would be good if the insurance companies disclosed just what the risks were for your particular property and where they got their evidence in making such assessments.

In what capacity are you making this submission?

individual consumer

Patricia Ruth Johnstone

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 1 plus insurer is responsible for checking third party records. Insurer will try to weasel out their obligations in terms of what is considered reasonable with option 2. People also may not remember everything that could be important, especially if they are older and things have happened years ago.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 1. Why should insurance companies be given the out of option 2 and still be able to have unfair contract terms.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Please use plain language as much as possible. A summary statement would be useful, as well as key information.

Any other general feedback?

I have never had any issues with my insurance companies, but worry that I may have neglected to tell them something in my history that they consider relevant, but in my mind is not directly and clearly related to a claim, and they will deny the claim. I try to be honest, but they seem to behave slyly and always focusing on their bottom line. I watch too much FairGo.

Your organisation

Retired

In what capacity are you making this submission?

individual consumer

Bruce Pankhurst

What is your feedback on the disclosure options? Which option do you prefer and why?

In addition to option 1 or 2: require life and health insurers to use third party records (eg medical records) to underwrite risk

You might have to disclose less information because insurers would have to check information from elsewhere, but insurers would incur higher costs which they would probably pass on to you.

Simply put everyone has some form of medical record, problem is I do not understand that there should be any additional cost to do so.All relevant information is provided herein.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 1: Remove the insurance specific exemptions to the unfair contract terms rules in the Fair Trading Act

Consumers could have greater confidence that their contracts do not contain unfair terms, but this would create a risk that some critical terms in insurance contracts could be declared unfair. Plus, insurers may increase their premiums to cover their risk, increasing costs for consumers.<br />
My reason for such is medical records used, as mentioned in previous would surely make for a level playing field and why shouldn't the consumer have some form of protection after all.There should be no excess added to premiums information is all there and available.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Require insurers to work with third-party comparison platforms

Consumers would be able to compare policies more easily. We are interested in feedback on how this could work in practice, especially in the general insurance industry where comparison websites do not currently exist.

Well for me this is about (the word) transparency which in these times is something that we here all the time but only rarely see. Unfortunately these corporate model companies are to profit drive and really at the end of the day are not to concerned for what is on the table for the consumer and there wellbeing.

How this would or could work really shouldn't be an issue if the above were addressed, but we certainly have the technology it depends on how much we want to change or do we have something that benefits all but those, insurance is designed to protect?

Any other general feedback?

In my bad experiences with insurance I was told by a bank only 4years ago that I needed trauma /sickness insurance even though I had more than enough mortgage protection and life cover besides a substantial investment in forestry on the property I own.Reluctantly made the nessesary changes through my insurance broker, which I still regret to this day.Have current insurance which I am constantly reviewing and scaling back on after many years which is a major problem as I am now faced with the risk of being under insured which is not great considering I have been a faithful comsumer of these products all of my life yet seemingly am forced to not continue with such (cost prohibitive) and am not certain if a claim will be accepted.

Your organisation

Farming (just sold) shearing and fencing contracting

In what capacity are you making this submission?

business

Norman Ryder-Lewis

What is your feedback on the disclosure options? Which option do you prefer and why?

The practical problem is one easily forgets what has happened in the past. Maybe there needs to be a time bar. Something which happened more than say six years ago, if overlooked, could not negate the contract.

Materiality is also significant. An insurance company shouldn't be able to avoid a contract by bringing in an oversight, which is probably only marginal to the condition. The oversight would have to be significant.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

None

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

This is a major one. I think all core policy wording should be required to be summarised on one page of reasonable size print. The problem with insurance contracts is the many pages, which the insured ought to read but doesn't have the time to do so.
I think the one page contract could be achieved if the law were to give it precedence, in importance, over all the other pages.

Any other general feedback?

Insurance contracts running to many pages are unfair to the insured.

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 2:
This is the basis of most commercial relationships and transactions. When we buy insurance we are paying for a service and can't be expected to be an expert in the termonology or various exclusions that insurers are able to present after the fact

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Easier to read policies would be fairer - suggest that the policies include a list of the top 3 reasons why claims are rejected under each type of policy, so buyers are aware of common pitfalls

Any other general feedback?

Insurance claims are adjudged by the insurer - when there is a grey area, or the claimant is unable to provide all of the required information the insurer is able to reject the claim, even though it is largely justified / sound. It seems like the normal business rules of "fairness" and "compromise" are rarely applied, and insurers would rather lose business than pay out claims. We have an expectation that our Insurer will first look for reasons to not pay claims.

Your organisation

Anonymous

In what capacity are you making this submission?

business

Max Thomson

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 2: Change the law so that you would have to disclose what a reasonable person would know to be relevant - but this need not stop the insurer asking questions to be answered truthfully and accurately. There should be no consequences for innocent failures to disclose information (other than serious consequences for fraud, deliberate lies, and reckless non-disclosure).

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Remove the insurance specific exemptions and change the unfair contract terms rules in the Fair Trading Act so that it is easier to understand how the rules apply to insurance contracts. All legislation should be as easy as possible to understand.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

The policy needs to be in plain language so you don't need to employ a lawyer to read it AND there needs to be a simple summary. Policies should not be complex.

Any other general feedback?

Insurers should be required to provide clear information about costs. This needs to include information about year-on-year premium increases when a policy is up for renewal.

In what capacity are you making this submission?

individual consumer

Seyed Iman Aghamohammadi

What is your feedback on the disclosure options? Which option do you prefer and why?

I strongly support Option 2: Duty to disclose what a reasonable person would know to be relevant.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

I strongly support Option 2: Rely on generic unfair contract terms provisions.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

I support options 3 and 4. Insurers should be required to provide a simple 1-2 page summary of key policy details to make it easier to understand and compare them. Insurance policies should be written in plain language and the cover provided should be clearly defined. Ability to compare insurance policies via third-party comparison platforms is an important tool for customers.

Any other general feedback?

Insurers should be required to provide clear information about costs including information about year-on-year premium increases at the beginning.

In what capacity are you making this submission?

individual consumer

Robin Corbett

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 1

This shares the obligations fairly - insurers must ask pertinent questions, consumers must be honest

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2

Applying more generic law (Fair Trade Act) to insurance is fair to insurance companies; they cannot expect to be exempt from law that applies to other trading.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Easy comparison is key. Allowing 3rd parties to participate is reasonable but they must be completely independent.

Any other general feedback?

Christchurch post-quake was chaos from the insurance perspective. The major stressor shifted from quakes to dealing with insurance companies. The establishment of an Insurance Tribunal to efficiently and fairly resolve disputes in the setting of major disasters should be seriously considered.

In what capacity are you making this submission?

individual consumer

Matt Frear

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Option 4. In the UK there are 3rd party comparison websites (comparethemarket.com, moneysupermarket.com) which make shopping around and comparing prices easy. I was surprised that no such sites exist in NZ.

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 1 - to be honest, there is only a minority of people who are dishonest with insurance companies so if your honest and up front it doesn't matter how many questions you answer if it makes it easier in the long run

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2 - it needs to be clear and currently it's not.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Plain Language is absolutely required - currently you almost need to pass your house/contents insurance via a lawyer to look over or have a degree in policy writing as there are so many pitfalls to the policy "jargon"

In what capacity are you making this submission?

individual consumer

Anthony Hawes

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 1

Keeps everything clear and simple. You answer the questions and they are the answers the insurer makes their decisions on.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2. Seems simplist.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Require insurers to disclose key information.
Again, keeps everything clear and simple. All insurers should have to declare answers to very clear requirements - e.g. "what will happen to the annual premium if this car is written off with no fault on the part of the insured?"

Any other general feedback?

Do not let them hide behind claims of complexity!

Your organisation

Personal submission.

In what capacity are you making this submission?

individual consumer

tina vao

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 1.
I want questions to be specific about what information is required but the questions should say that the consumer should answer as truthfully and as accurately as possible because I can't remember all dates, doctors names, medications etc when I've been hospitalized in the past. I also don't want to have to decide whether information is relevant or not.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Policies should written in plain English that's easy to understand, not written in long winded complicated sentences full of jargon wording and covers two or more contradictory points in the same sentence all designed to confuse the consumer. I have had policy contracts that are over 20+ pages and they are oppressive and unfair because of the complexity of the language used and length of the policy.
I also prefer to see a summary statement of cover to help reinforce my understanding of the contract terms.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Yes I would like to see a third party comparison platform to compare insurance policies. The Consumer organisation could help with this as they research and compare groups of products they test and report back to its members.

Any other general feedback?

The cost of insurance premiums in comparison to the amount of cover determined by the loading on a policy is I consider to be unfair in my experience. e.g $548 per month for $199,000 life cover and $130,000 trauma.
Consumers should be explained how the insurer decides on how much loading is applied.

In what capacity are you making this submission?

individual consumer

Anonymous

Any other general feedback?

Why not make insurers who sell any form of insurance to state on any given policy to stipulate What YOU ARE NOT COVERED FOR???Instead of extracting maximum premiums for a pick & mix lollie scramble of maybe what you could be covered for. And stop assumiming we all have a degree in the untangling of the mumbo jumbo of fine print that needs a university degree to comprehend. Typical to rely on the masses to fund the few

Your organisation

Self employed tax payer

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Please couple disclosure options with a moratorium preventing insurers from using predictive genetic test results to treat customers who have adverse predictive genetic test results less fairly than others without justification.

Such a moratorium is in place in the UK and prevents people who may develop conditions in the future (eg cancer) being denied life insurance cover below a certain limit. For example, I have been denied life insurance cover in New Zealand as I have a bowel cancer gene. However, it's a mild form of the gene and I have no family history of bowel cancer and receive annual screening, but the insurer denied me coverage. I had no problem obtaining cover in the UK despite my test results.

See here for details of the UK moratorium: https://www.abi.org.uk/globalassets/sitecore/files/documents/publications/public/2014/genetics/concordat-and-moratorium-on-genetics-and-insurance.pdf

In what capacity are you making this submission?

individual consumer

Allen Bell

What is your feedback on the disclosure options? Which option do you prefer and why?

I find the disclosure requirements are hit and miss. It is not clear what has to be disclosed to the insurance company in respect of the individual policy. If you answer all the questions truthfully on the request form when applying for Ins Cover then it should be the Insurance Companies responsibility to seek additional info before issuing cover. I feel non disclosure is the first act in declining a claim made by the Insurance Company in many cases to decline / absolve it of responsibility for the payout. Reeks of dishonesty in some cases.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Unfair contract terms and conditions included in most policies are similar to unfair terms and conditions universally included in contracts , leases and rental aggreements. All a way for the Insurer to escape responsibility for payout just as Lessors and House owners to transfer Landlord costs to lesses and renters.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

All policies must be in plain simple easy to understand language that does not require a lawyer to translate. No hidden escape clauses.

Any other general feedback?

When dealing with Ins Companies it appears their action is to decline responsibility. My experience with EQC confirms my position. In an EQ about 2.5 years ago I was standing right beside newly installed ranch slider doors when I heard a loud crack noiseand i saw a large crack apear in the double glazed unit. I claimed against EQC. They sent an assessor who seemed ok but then i received a letter declining my claim. The reason was the crack ran the wrong way accross the window so could not have happened in that EQ. That infuriated me. I was actually less than metre from the window when it cracked during the EQ. I am an honest person and EQ were calling me a liar. I wrote a letter of complaint and after quite a negotiation with me, the manufacturer and EQC they reluctantly accepted liability. It was not so much the money but being called a liar that made me angry.

Your organisation

Private

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 2. I recently changed my car insurance and forgot my wife had had a minor accident the year before and did not declare it (even though my insurer would have it on their record). I could have any claim that I make in the future rejected

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2. More clarity required please. My landlord's insurance from requires me to have proof of a written inspection report at least 3 monthly. If not, my insurance is invalid. This was not declared by my insurance company and is too specific.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Use most of the options - Plain language is a must, together with insurers required to provide key information. The use of 3rd party comparisons would be a great idea.

Any other general feedback?

I certainly feel insurance companies now go out of their way to try to fail claims, and am now reluctant to fully insure because they WILL get out of a claim because of a technicality I did not notice in the fine print.
Bring back a "State" insurance to keep the insurance industry honest.
I am very concerned regarding specific areas of the country being "high" risk compared to others. The very reason insurance companies started in the first place was to spread risk between all of its members.

Your organisation

None

In what capacity are you making this submission?

individual consumer

Wade Devine

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 1: Change the law so that you would simply have to answer insurer questions truthfully and accurately. Insurance companies to date have multiple out's of contract. Once a policy has been issued there should not be further obligations of disclosure on the part of the policy holder.
The present regime is far from satisfactory.
I support Consumer NZ and their submissions on the complete review.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Currently on policy renewals there is further disclosure terms implied which are confusing and I think breach the Fair Trading laws.
Preexisting condition exclusions are way over the top in the event of an accident and are unreasonable.

Support Consumer NZ opinion on this section.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

The current terms and conditions are too lengthy and can be confusing.
Need to be pared down to one or two pages max and in plain English.

Your organisation

Individual

In what capacity are you making this submission?

individual consumer

David Marshall

What is your feedback on the disclosure options? Which option do you prefer and why?

Prefer Option 1 as a method of removing confusion and ensuring that the industry make their requirements crystal clear.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 1 - all businesses should be subject to the unfair contract term rules of the Fair Trading Act

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

A combination of "Require plain language insurance policies", and "Require insurers to work with third-party comparison platforms". Many policies currently have multiple pages of complex legal conditions and the discipline of having to express everything in plain language would be invaluable. Third-party comparison platforms are invaluable to consumers when trying to determine which company offers the most appropriate protection being sought, along with comparative pricing.

Any other general feedback?

I strongly support the proposed changes to make the insurance market more transparent for consumers and to ensure that they get a fair deal.
I would like to see greater clarity on what is covered and what is excluded to avoid issues when making claims eg where values are discounted more than anticipated, maximum refund is capped, or multiple items damaged are counted as separate claims with an excess for each, or the faulty devuce leading to a claim is not replaced but the items damaged are - eg leaking dishwasher not replaced but floor coverings are!

In what capacity are you making this submission?

individual consumer

Elizabeth Win

What is your feedback on the disclosure options? Which option do you prefer and why?

I tried to do due diligence & make sure I had disclosed everything about my past health when renewing my life insurance policy. I had to alter it as premiums were getting higher every year. When my friend/agent did the renewal he couldn't get better rate as previous agent had not done a full disclosure mental health assessment & I had had some issues with depression. So because of one agents past negligence, & some minor issues with depression, I am now paying more & will be forever. As I'm not planning on jumping off a tall building any time soon, & am only 53 & in good health & not on any psych meds nor ever been treated in a mental health facility, I don't think I have been treated fairly.

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Disclosure needs to be fairer for consumers and businesses. Insurer's must make sure their questionnaires are clear and relevant to the type of insurance. Also the insured should not be penalised for failing to disclose something they have genuinely forgotten about or didn't know was relevant. Currently the perception is that insurers' will go to great lengths to try to catch out the insured party in a non-disclosure so they can deny the claim. Hence the lack of trust in insurance companies.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Prefer Option 2. Removes insurance-specific exemptions and brings insurance contracts into line with other types of contracts. This should make it easier for consumers to understand. While there may be some price increase in premiums, competition between insurance companies should somewhat counteract this.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Prefer Option `1. If a "complex term" cannot be translated into plain English that the average consumer can understand then it should not be in the policy. Consumers have a right to understand exactly what they are paying for.

Any other general feedback?

Option 1 for Insurers and Intermediaries, i.e. keep the status quo. If the insurer doesn't want to be liable then they need to ensure they only work with trusted intermediaries. There is a risk with other options if the intermediary goes out of business which may put the insured party at risk.

Option 2 for Exclusions. If the claim has nothing to do with the exclusions then the insurer should have to pay out.

Failure to notify claims within time limits - for insurance to work for the insured there needs to be good competition in the insurance market. Legislative terms should ensure that insured parties are readily able to shop around and not feel tied to a particular insurer.

In what capacity are you making this submission?

individual consumer

Julia Cahill

Any other general feedback?

1. It is critical that insurers cannot reject claims for non- material disclosure breaches.
2. The Insurance 'Ombudsman' is not an Ombudsman ie a government appointed and funded independent body. The title misleads the consumer and is intended to mislead the consumer. It's findings are at odds in many cases with what a court of law would determine. It is set up by the insurance industry and funded by the insurance industry and is anything but an independent arbiter.
3. Those claims with merit that are pursued via the legal system are usually settled a short time before trial usually for far less than a Claimant would get if the case proceeded to trial AND with the Claimant bearing their own costs. The lawyers Claimants can afford to instruct are usually out if their depth because so few cases go to trial that they have become deskilled in effective litigation and they are only too willing to settle at mediation. This would be a lot less serious a problem if the outcomes of mediated insurance cases were not confidential. The consequent lack of precedent is a further very serious barrier to just outcomes for claimants.
4. The District Court "Claimant friendly" system is a shambles and far more unwieldy and costly for everyone, including judges than is commensurate with justice. Once again this is a product of a profession that mediates rather than litigates. Mediation is a very important option but it only really works if the risk of it failing is very high for whoever is in the wrong ie they will lies if the matter goes before the court. The case has to be in trial readiness state for mediation to produce the right outcome.
5. The reason the Court claims procedure is so flawed is because the legal profession inputting to its design has too little experience of litigating on behalf of consumers
6. Costs should all be paid by the losing party!

In what capacity are you making this submission?

other

Other capacity

23 years of litigation on behalf of consumers in UK

Ricxhard Brown

Any other general feedback?

Over half of all recent insurance invoices are for government charges, fire levies and GST. The insurer receives less than half. The real problem is the govt charges compounded by adding GST.

In what capacity are you making this submission?

individual consumer

Anonymous

Any other general feedback?

At age 64 & 6 months, I was sent an invoice for income protection insurance which terminated at my 65th birthday and which included a 6 month period for which I could not claim i.e. after paying this premium for many years I was asked to pay another for which I could never claim. I was told this was a computer glitch, but really it was just dishonest.

Your organisation

Individual

In what capacity are you making this submission?

individual consumer

Paul Barrett

What is your feedback on the disclosure options? Which option do you prefer and why?

Option 1 as the insurers need to manage the questions and what they see as risk up front and not be able to have a back door way out of the contract by relying on non disclosure
It would be useful for them to be able to get medical records etc to look at the actual risk
however once insured they should not be able to change the contract based on any new emerging risks over time
Any failure to disclose based on their questioning is at their risk

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

remove any unfair contract terms and enure that the insured is protected

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

yes clarify language and ensure it is mandatory that policy can be compared and that the performance of insurance company are managed . plain language, all wording clearly defined, summary statements and third party comparison are all important . Insurers need to disclose performance, % figures on the number of claims declined and time frames for settling claims should be available to the public.

Any other general feedback?

Yes Insurance company's need to be held to account for the denial of claims and the protracted processes they have for paying out. If a claim is not settled within 1 year, then there should be significant penalty's put in place to make it happen. The penalty's should be increased on a yearly basis and an independent body set up to manage the process. An example our vehicle claim, the insurance company asked the other party and they denied being involved. That meant that we lost our no claims bonus. WE also had a contents claim denied after one claims handler asked us to get the costs assessed and when we did they just said they were to expensive and we have never had that claim settled. Also our house was left uninhabitable by the CHCH Earthquakes and the response to this by the insurance company's is disgusting and needs to be regulated. The response of the insurance company's in CHCH should not be allowed to happen and to try to drive out of policy settlements for earthquake damaged homes should be illegal. they have damaged the housing stock in Christchurch and have people living in broken homes and no end in site 9 years after an event. they need to be regulated and controlled or kicked out of New Zealand.

Your organisation

Sustainability by Design Limited

In what capacity are you making this submission?

individual consumer

Roger Matthews

What is your feedback on the disclosure options? Which option do you prefer and why?

At the very least disqualification for non-disclosure should only be available for use when the non-disclosure is directly relevant to the claim and there is reasonable belief of an intention to deceive.

For example at present failure to declare circumcision at age 1 month could potentially be used to refuse a claim for say lung cancer at age 64 years on an income insurance policy.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

It is disappointing that this question even needs to be asked! Of course contracts should comply with the Fair Trading Act.

As an example a number of existing travel insurance policies specify particular dive training providers for qualification and not other equally professional agencies (PADI, NAUI, SSI, BSAC, CMAS all offer similar dive training and a number of policies specify only one or two in their fine print). This is anti-competitive trade practice and should not be allowed.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

In many cases existing policy contracts exist for the sole benefit of the insurance companies. As a basic principle customers with an average reading ability (morning newspaper) should be able read and understand what they are signing. If they can't it begins to look like a deceptive trade practice.

Any other general feedback?

Insurance should be like other consumer products and bound by all consumer law without exemption.

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

The insurer seems to decide what is relevant, many terms and conditions include things with a tenuous link e.g. if you have a health condition and come to claim but could be denied cover because of that condition then it could be you're not covered for other things either. Same with house or contents accidents happen that may seem like don't need to disclose / minor damage but could be used to deny cover. Option 1 Change the law so that you would simply have to answer insurer questions truthfully and accurately would be better, but again could be used unhelpfully e.g. list health issues within the last 7 years would be better to require life and health insurers to use third party records - but again GPs will give varying info based on the detail they do or don't record. listing house or contents damage within last 7 years that you claimed or not again could be difficult to expect reasonable person to recall.. would be better if could go back and tell the insurance company to look at their own records of claims, or for insurers to trade information / look at register of claims rather rely on memory and risk non cover based on disclosure being incomplete etc

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 1: Remove the insurance specific exemptions to the unfair contract terms rules in the Fair Trading Act. Insurers shouldn't be able to use an omission to get out of cover, or drag out the time to cover expecting the insured person to pay in the interim .

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

I agree it is difficult to read and compare policies. Perhaps there could be a suite of minimum inclusions of types of insurance, and any additional extras identified - that is where the comparison platforms come in, as well as independent professional advice as to minimum inclusions.
It would be helpful to put contracts in plain language, but again hard to define what is 'plain' and doesn't necessarily cut down the document much.
Core wording would be helpful to be defined - perhaps in law so all insurers have to use the same?
Summary statement is great, but again sometimes its the devil in the detail type fineprint that means people aren't insured for what they thought they were. Perhaps this is part of the disclosure of key information that insurers should have to disclose e.g. if you approach an insurer for a specific purpose, or that they have a duty to point out all the things that might mean you're not covered where you thought you were and put it in writing via email or something that can be recorded and checked later so there can be no dispute about what was or wasn't said

Any other general feedback?

Also have to make it so that most people will be insurable with some key conditions / circumstances and not that they can just opt out of cover entirely. Unacceptable that in CHC some people were uninsured for all things like fire etc where the insurance companies were trying to limit their exposure to one risk.

Christchurch earthquakes showed that there were some winners and some loosers in relation to interpretation, should have been the governments role to ensure fairness if the whole point of being insured is to try to be covered.

Now its painfully complex trying to estimate what it'd cost to replace the home and contents and adds cost to the insured to pay someone for their opinion to update your cover level! Will be a nightmare if something like that is allowed to come in for health...

Perhaps the government could intervene to ensure insurance companies premiums remain reasonable and affordable for all?

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

If the insurance company had an example of what information they required and did a third party check then all would be on the same page at the start of the policy and not be able to change the rules at claim time.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Making insurance subject to to the fair Trading Act's ban on unfair terms would get rid of one sided policies.
NB: insurance is the only industry that's largely exempt from this ban.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Having an example of what information the insurance wants and how much detail.Use third party eg Medical records before insurancing so no surprises when you claim. and you know what is exempt.

Any other general feedback?

Improving price transparency:
requiring insurers to provide clear information about costs, including increases at the time of renewal, would make it easier for cunsumers to shop around.

Publishing complaints:
requiring industry dispute schemes to "name and shame" companies that aren't playing fair would push the industry to lift it's game.

Cleaning up commissions:
getting rid of commissions would be the best way to tackle the conflict of interest they create.

Your organisation

Individual

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Definitely Option 1. As I will describe below, problems can still occur even when a consumer has answered the insurer's questions in good faith, but Option 2 is so wide-open that it provides absolutely no protection from an arbitrary decision by an insurer. Allowing option 2 would simply clog the courts and arbitration system with cases. Make the insurers ask the right questions and ensure the terms used in those questions are well defined and there should be no problems - and no burdensome costs on the insurer. Certainly, they must be able to develop the critical questions that they need answers to without it costing significant sums.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Again Option 1 is the clearly better choice for us as consumers. Case in point, I recently went in to go through my home and contents policy with my broker. Even he could not provide me with answers as to some of what the policy language meant - and in fact why it was even in the policy document. Obviously, this industry is no different than many others. They want to put in place contracts that protect themselves and they hire the best law firms to write those policies. However, what choice does a consumer have if all of the insurers act as an oligopoly and use the same standard wording and offer the same standard terms? We rely on government to ensure that insurers who wish to trade in NZ do so fairly and not by writing policy wording that lets them off the hook on technicalities when we need the insurance the most. If this raises costs, then I for one am happy to pay that extra cost for the improved likelihood of being treated fairly when it comes time for an insurer to pay out.

As a corollary to the above, in 2015 we completed our house and contents insurer's questionnaire to the very best of our ability. We ran our responses past our broker who agreed with how we answered the questions. A year later we were hit by the Kaikoura earthquake and now 2.5 years later we are fighting with our insurer over the question of whether we were living in the house as we said we were. They have accused us of deliberately falsifying the information on the questionnaire - and have refused to pay our claim. This comes down to their definition of "living in the house" versus ours. We interpreted that question one way and they interpreted it another. There is no definition in the policy of what "living in" means. Our broker has fought for us but to no avail so far. The insurer under current law has decided to read intent into our actions and has decided we "willfully failed to disclose" how we were using the property. This of course isn't the case, but our only recourse now is expensive litigation. This is silly. Option 1 would stop this game playing and force insurers to be clearer up front and also prevent them from shirking their duties on technicalities at the back when it comes time to fulfill their duties.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

Clearly all of the options listed would help consumers. Anything you can do to get these guys to make their policies clearer and to eliminate "wiggle-out" language that lets them avoid their commitments when the consumer needs them most would be a huge benefit.

Any other general feedback?

We all understand that for house and contents insurance, there are already limited choices here in NZ. The industry will continue to hold that over our heads - "if you make it too hard to do business here, we will not offer the products in NZ". We get that. However, if they are going to be here they need to offer a product that does what it say it will do. If that means we pay more for insurance then that is the way it needs to be. But government plays a critical role in not letting these providers cheat their clients. We've had nearly a decade of it starting with the 2010 Christchurch EQ's. Enough is enough! We need government to regulate these guys and to make sure they honor their contracts. That's not that hard.

Finally, while it is not addressed by your paper, there is ample evidence that the insurance industry is using trade contractors to provide them with repair costings who are then not required to honor those costings once the insurer settles the claim in cash with the homeowner. This is a sham and allows the insurer to pay the trade contractor for the quote, but the trade contractor doesn't need to actually do the work. This allows the contractor to give the insurer a low-end costing - which in many cases will not be enough for the consumer to get a reliable contractor to perform the work. The answer is simple, unless the trade contractor affirms that it is willing to do the work for the consumer at that price, the insurer should not be allowed to rely on that quote.

Sorry, I am one of the people that has been shafted by the insurance industry. I have zero faith that they will do the right thing. Please! Please! Please! Don't miss this opportunity to fix this industry by regulating it properly. They will bleat like a flock of sheep - but we as consumers need you to do the right thing and level the playing field with these con artists!

In what capacity are you making this submission?

individual consumer

Michael Ryder

Any other general feedback?

You should also look at unfair House Insurance claims repair contracts that are being presented for signature. I have a current claim and being pressured to sign a contract with essential documents referred to being withheld and containing clauses that make it prudently impossible to sign. This may well be the insurers objective so they can force a cash settlement rather than repair. I have been engaged in the insurance industry for 55 years and it is so disappointing to see such practices . I am happy for my claim to be the subject of investigation.

Your organisation

Self-employed Insurance Broker (Life)

In what capacity are you making this submission?

individual consumer

Anonymous

What is your feedback on the disclosure options? Which option do you prefer and why?

Option one. The Utmost Faith clauses must be removed, as they're stacked too far in the favour of the insurance company. With the resources available to the insurers, they will easily formulate a question list that truly reflects their underwriting risks. After all, they know their business infinitely better than the customer. Also, in regards to medial/income insurance, if permission has been granted to the Insurer to view medical records, and they chose not to, or they miss something, no further recourse should be available to them against the insured. In this case, the customer has fully disclosed, and it would be grossly unfair for the insurer to refuse a claim based on their inaction.

What is your feedback on the unfair contract terms options? Which option do you prefer and why?

Option 2. Insurance companies aren't as special as they make out. They are big, and can employ resources that the insured can't. They should not be able to base their business model on using unfair contract terms to turn a profit. Terms need to be clear, fair and with no wriggle room to decline claims on irrelevant undisclosed information.

What is your feedback on the options to make it easier to read and compare insurance policies? Which option do you prefer and why?

No comment.

Any other general feedback?

The insured are at the mercy of the insurance companies' good-will when making a claim. Legitimate claims should not be at risk due to irrelevant nondisclosure of a matter that would have no real bearing on the underwriting of the policy when taken out. Currently if they wished, they could dig until a trivial matter was unearthed to muddy any claim. This avenue needs to removed unless the matter was fraudulent or truly material.

In what capacity are you making this submission?

individual consumer

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