MBIE seeks submissions on insurance contract law reform bill

25 February 2022

On Thursday, the Ministry of Business, Innovation, and Employment (MBIE) released a consultation paper (Consultation Paper) and draft Insurance Contracts Bill (Bill).1 The Bill is intended to reform, consolidate, and modernise existing insurance legislation into one statute. It will affect the rights of insurers and insureds under all insurance and reinsurance contracts entered into after its enactment, as well as insurance intermediaries and brokers. Our previous update on the MBIE-led reform can be found here.

The Consultation Paper notes that most of the relevant policy decisions underlying the Bill have already been made, but MBIE seeks submissions on the drafting of the Bill by 4 May 2022. It will be critical to ensure that the Bill does not lead to unintended consequences, and Bell Gully will be making a submission.


Currently, there is no single statute governing the law of insurance contracts. Current legislation includes the Marine Insurance Act 1908, Life Insurance Act 1908, Law Reform Act 1936, Insurance Law Reform Act 1977, Insurance Law Reform Act 1985, and Insurance Intermediaries Act 1994, as well as the common law. 

As the years of these statutes indicate, it has been some time since there has been a comprehensive review of insurance contract law. MBIE has been conducting a review since February 2018, and the Bill is the outcome of that review. 

The Bill

The key aspects of the Bill include:

  • Repealing all of the statutes referred to above (apart from the Marine Insurance Act, which it amends);
  • Providing for new duties of disclosure for consumers and non-consumers when entering into or varying a policy, and reforming the remedies for breach of those duties;
  • Providing for a statutory duty of good faith;
  • Setting out when notification provisions in an insurance policy will bind the insured;
  • Prohibiting home and contents insurance policies from including a pro rata condition of average;
  • Removing the ability of third party claimants to assert a charge over a liability policy;
  • Addressing the duties of intermediaries and brokers in relation to payments and premiums under a policy;
  • Inserting obligations on insurers to assist policyholders to understand insurance contracts, and providing for new regulations to be made prescribing the form and presentation of insurance policies;
  • Restricting the use of arbitration as a dispute resolution mechanism for consumer insurance contracts;
  • Reforming the law relating to life insurance policies.

MBIE seeks submissions by 4 May 2022. Bell Gully will be making a submission, and welcomes feedback from clients and other interested parties on the issues covered. 

Bell Gully will host a webinar in March 2022, in which we will discuss key aspects of the Bill. Please contact us here if you are interested in attending.

If you have any questions about the matters raised in this article please get in touch with the contacts listed or your usual Bell Gully advisor.

1      https://www.mbie.govt.nz/have-your-say/consultation-on-exposure-draft-insurance-contracts-bill/.

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.