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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”
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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 1977. • 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). • Insured’s 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.
