Andrew Horne: Minter Ellison Partner on the new insurance legislation

Insurers are required to ask the right questions and not leave it up to policy holders. 

New legislation has been designed to modernise outdated insurance laws, helping protect consumers and provide certainty for insurers. 

A Bill has passed its Third Reading in the House.  

Andrew Horne, a partner at law firm Minter Ellison, told Mike Hosking people won't need to predict the future when it comes to the risks facing their properties. 

He says it’s good for consumers, as they won’t have to put themselves in the space of an insurer and try work out what an insurer would think is important. 

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Episode Transcript

Speaker 1 (00:00):
We've got to change in the law around insurance. This

(00:02):
is the Contracts of Insurance bill that's past. It means
that we as customers will only need to take quote
reasonable steps to not misrepresent risk. Insurance will be required
to ask more questions. Minter Ellison Rudd Watt's partner Andrew
Horns with us on this. Andrew, good morning to you.

Speaker 2 (00:17):
Oh, good morning, Mike.

Speaker 1 (00:18):
What's reasonable steps and who decides?

Speaker 2 (00:22):
Good question? Excuse me? Reasonable steps is really going to
depend on the facts of each case, and there can
be a bit of uncertainty coming in here, whereas the
old law was quite certain relatively because the test was
whether whether or not a reasonable insurer would have expected
the information provided to have been material.

Speaker 1 (00:43):
And so this is this only it comes up when
it's in dispute and you have to take it somewhere
and argue your case.

Speaker 2 (00:49):
Yeah, yeah, that's right. But then you only really need
the law to come in and provide you with an
answer when you're in dispute.

Speaker 1 (00:56):
Okay, So does this then mean when I go for insurance,
I'm going to be asked eight hundred and fifty seven
thousand questions now, so they cover themselves off.

Speaker 2 (01:04):
You are going to be asked more questions. And the
reason for that is that under the current bore, if
you take out a policy of insurance, you have to
tell the insurer everything a reasonable insurer would think was
relevant to the risk. And how are you going to
know what a reasonable insurer thinks was relevant to the risk?
So the changes that now all you need to do
is not give misceeding answers. But what that means is

(01:25):
that the insurer has to ask you questions about everything
they want to know about.

Speaker 1 (01:29):
Right, so thirty seven Smith Street, the fact it's on
the edge of the cliff? Do I put that forward
or do they go, oh, I see, mister Hosking, it's
on the edge of a cliff.

Speaker 2 (01:39):
Well, right now you need to say to them, it's
on the edge of a cliff. Under the new rules,
they will have to ask you questions like is there
anything about the geography of your house that we ought
to know about or that might increase the risk, or
more specifically, what is the topography around your house? They'll
try to find easier ways to do that and make
it clearer. But that's the.

Speaker 1 (01:59):
Change about the once in one hundred year, once in
a thousand year argument. But mister Hoskin, you live by
the beach and the tide came through your lounge, and
I go, well, it's never happened before. That must be
a once in a thousand year event, And as it
turns out, it was.

Speaker 2 (02:11):
Yeah, you don't need to predict the future. You just
need to tell them about the circumstances you've got. So
and the thing is you just are going to need
to look at the questions that they ask you and
answer those questions fairly.

Speaker 1 (02:23):
Is this good stuff generally?

Speaker 2 (02:26):
Yeah, it's really good for consumers because it means that
consumers don't have to put themselves in the space of
an insurer and try to work out what an insurer
would think is important, which is what they have to do. Now.

Speaker 1 (02:37):
Good stuff, Andrew, appreciate your time verty much. Andrew Horne,
who's minter Ellison Rudd Watt's partner. So hopefully that clears
things up.

Speaker 2 (02:43):
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Speaker 1 (02:47):
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