Insurance Contracts Bill Neil Campbell NZILA Annual Conference Wellington, October 2005

Purpose of Bill To ensure: that a fair balance is struck between the interests of insurers, insureds, and other members of the public that the provisions included in [insurance] contracts, and the practices of insurers … operate fairly

Mis-statements and disclosure Mis-statement provisions largely re- enact the provisions in ILRA The provisions apply only to statements made in any proposal or other document. The contract may not be avoided by reason only of such statements, unless substantially incorrect and material.

Mis-statements and disclosure Disclosure provisions are those recommended in Report 46 (1998). Right to avoid limited to: Within ten working days of risk first attaching. Reinsurance contracts. Blameworthy non-disclosure (reasonableness). Insureds answer to a question is substantially incorrect because of a non-disclosure.

Blameworthy non-disclosure Insured knew, or a reasonable person would have known: The undisclosed fact. That that fact was material. But under existing law, a non-business insured may have no duty to disclose facts outside actual knowledge: Economides [1998] QB 587.

Non-disclosure in answers Report 46: onus should be on insurers to ask questions. But this highlights a contrast in the remedies available: Non-disclosure: ab initio avoidance. Misrepresentation: prospective cancellation (CRA, subject to contracting out).

Mis-statements and disclosure Advantages of Australian approach: A more flexible remedy, based on what the insurer would otherwise have done. Misrepresentations and non-disclosures have the same effect. A code.

Section 9 and claims made policies Clause 19 attempts to prevent existing s 9 from applying to deeming or extension provisions. Preferable to allow s 9 to apply, but not beyond a set period (eg, 30 days) after policy expiry.

Section 11 Events or circumstances that have no, or limited, loss-causing potential, eg using car for business purposes. Section 11 will not apply to exclusions that: Define the age, identity, qualifications or experience of a driver, pilot, or operator. Define the geographical are in which loss must occur. Exclude loss while vehicle, aircraft, etc is being used for commercial purposes other than those permitted by contract. This piecemeal reform is preferable to s 54 of the Australian Act.