The government has introduced its Contracts of Insurance Bill, with the proposed law passing its first reading on 2 May.
Under the bill, insurers would bear the greater burden of disclosure obligations. Opposition parties have agreed to take the bill to the select committee stage.
In a statement, commerce and consumer affairs minister Andrew Bayly said insurers could currently void insurance and refuse all claims if customers had not made adequate disclosures.
Bayly believes current insurance laws need to be simplified.
"These reforms are long overdue. New Zealand's insurance law is complicated and dated, some of which is more than 100 years old. The recent extreme weather events show just how important a well-functioning insurance system is, and it's about time we brought insurance law into the 21st century.”
Insurers will be responsible for asking relevant questions and will have to make payments within a reasonable timeframe.
Consumers are still expected to take reasonable care to avoid making false statements.
"I have consulted with industry to make sure this bill balances customer protection with providing certainty for the market. In a cost-of-living crisis, we are acutely aware of the need to keep insurance premiums to a minimum," Bayly said.
"This bill moderates the cost of insurance by maintaining things that are working well. The last thing I want is to introduce risk and uncertainty, which would drive up insurance premiums and ultimately harm everyday Kiwis."
