Litigation Forecast 2025: Industry overhaul: Contracts of Insurance Act 2024

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In this episode of the 2025 Litigation Forecast Podcast Series, Partner Andrew Horne, is joined by Senior Associate Hannah Jaques. They discuss the significant changes coming to the insurance industry as a result of the Contracts of Insurance Act 2024. The conversation covers the distinction between consumer and non-consumer insurance contracts, changes to the duty of disclosure, new remedies for breaches, and the impact on third-party claims.

[00:33] Andrew and Hannah begin by discussing the introduction of the Contracts of Insurance Act 2024. They highlight the two fundamental changes: the distinction between consumer and non-consumer insurance contracts and the changes to the duty of disclosure for each group.

[01:15] Hannah explains that the definition of consumer insurance contracts is based on the purpose of the contract rather than the policyholder. Consumer insurance contracts are for household, domestic, or personal purposes. She mentions the challenges in classifying certain products and the potential for certification and regulations to provide clarity.

[02:50] Hannah discusses the practical steps insurers need to take, such as classifying their products as consumer or non-consumer. She also talks about the impact on policyholder certification and regulatory procedures.

[03:45] Hannah elaborates on the fundamental change in the duty of disclosure for consumer insurance contracts, which now requires policyholders to take reasonable care not to make a misrepresentation. This shifts the burden to insurers to ask specific questions. For non-consumer contracts, the duty has changed to make a fair presentation of the risk.

[05:57] Hannah explains the introduction of proportionate remedies for breaches of disclosure duties. Under the new act, insurers can address breaches based on what they would have done if the information had been disclosed at the time of policy entry. This change is seen as positive for maintaining good insurer-policyholder relationships.

[07:18] Andrew and Hannah discuss the preparation required for the new regime, which comes into force by 15 November 2027. Insurers and brokers need to review and update all policies, communications, and IT systems. They note the risk of oversight due to the volume of material to be updated.

[09:10] Hannah highlights the need for insurers to ask many more specific questions to comply with the new duty of disclosure. This creates a balance between thorough risk assessment and not overwhelming policyholders with too many questions.

[10:01] Andrew and Hannah discuss the new direct right for third parties to bring claims against insurers. The changes eliminate the need for third parties to establish liability in advance, which is expected to reduce the need for separate defence costs cover.

[11:26] Hannah provides historical context on defence costs cover and explains the changes under the new regime. The new legislation is likely to make it easier to settle claims as insurers will take a pragmatic financial position

[13:13] Hannah outlines the specific regime for third-party information requests. Insurers and brokers need to implement new processes to comply with the 28-day timeframe for providing information.

[15:30] In the short term, the industry will focus on compliance by November 2027. In the medium term, Andrew predicts disputes will test the new act's procedures. Long-term, case law will emerge to provide guidance, but there will be a period of uncertainty for the insurance industry as the new legislation beds

For show notes and additional resources visit minterellison.co.nz/podcasts