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Insurance Business | 24 Apr 2015, 11:20 a.m. Agree 0
Industry self-regulation is not enough on its own, according to the Insurance & Savings Ombudsman.
  • Graham Sanders | 24 Apr 2015, 12:31 p.m. Agree 0
    So, it's ok now to select against an insurer provided you can claim it was accidental.
    So, if the insurer makes an accidental error in issuing the policy or in any other respect is that also OK?
    As I learned many years ago, the original legal statement that espoused the doctrine stated something like the following: "Insurance is a contract of speculation... The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only: the under-writer trusts to his representation, and proceeds upon confidence that he does not keep back any circumstances in his knowledge, to mislead the under-writer into a belief that the circumstance does not exist."
    If the insurer is now to proceed with uncertainty I would expect premiums to eventually reflect that unknown risk onto all policyholders.
  • Giles Thorman | 24 Apr 2015, 01:41 p.m. Agree 0
    The example that Karen Stevens cites is of a client that had had depression years "before" but did not disclose it on her Medical Application. Karen then goes on to say that the Insurer should only be able to avoid a policy if they can prove the non-disclosure was deliberate. Is she really suggesting that the client had "forgotten" that she had suffered depression???

    Depression can lead to many other Health problems aside from mental health issues and so the Insurer could well have been acting totally appropriately.

    I am sure that Karen does not need to be reminded an Insurance Contract is a contract of good faith between two parties and not answering the questions truthfully because you may be embarrassed or because you cannot be bothered too is hardly fair on the Insurance Company OR its other policy holders who will have to pay for the Clients "memory loss".
  • Lawrence Roberts | 27 Apr 2015, 09:32 p.m. Agree 0
    Insurance as practiced in New Zealand is a one-sided arrangement that significantly disadvantages individuals and small businesses due to the complexity of the legislation, precedents, contract conditions and terminology that have evolved. It is fair to say this evolution has been heavily influenced by insurers using every opportunity to ensure the complexity and one-sidedness continues (influencing the legislative process via amenable parliamentarians and ministers, managing court outcomes by settling early to avoid inconvenient precedents and exploiting the financial and personal cost of drawn out legal processes).

    Post-earthquake experiences have accentuated the extents and depths New Zealand insurers can go in minimising or avoiding their contractual obligations. These experiences have their counterparts in post-disaster experiences in the United States. An official report after the Queensland floods gives evidence of some of the dubious actions carried out by insurers. Sadly our current government and ICNZ are unwilling to support a similar such enquiry here (presumably if there was nothing hide there would be open support for an investigation into practices here).

    In this context a potentially unrepresentative insurance example from the Insurance and Savings Ombudsman does not detract from the demonstrable need for insurers to conduct themselves in a way that is a significant improvement over what is now happening. This is especially so when insurance is purported to be based on utmost good faith yet insurers do not offer this up on their part. Unfortunately the revised Fair Insurance Code is little more than tinkering and window dressing. More is needed. Disclosure is one such area of need.

    In a way the need for legislation is underlined by the arguments provided in the two comments above dated 24th April. The arguments seem unduly rooted in a mythical past when all insurers were angels and policy holders criminals looking for an opportunity to strike. As the U.K. has shown utmost good faith is a seriously faulty concept that has to be replaced. That is the case here too and, despite attempts of vested interests to keep the status quo, change must happen. As there is neither willingness nor competence in the insurer camp to make a genuine attempt at this legislation is appropriate.
    .
  • Tim | 29 Apr 2015, 11:58 a.m. Agree 0
    Karen Stevens may well be legally qualified and an eminent ombusdman but her failure to understand the principle of utmost good faith will not endear herself to Insurers, or their truthful customers who will bear the burden of paying for more marginal claims, and some downright fraudulent ones.
  • Mike Naylor | 01 May 2015, 04:25 p.m. Agree 0
    Tim - Karen understands the legal principles of non-disclosure very well. You fail to point out where her error is.
    What she is saying in essence is - lets update our pre-1900 law to match the current standards of the UK and Australia. I suppose you think that the UK, the world's premier insurance centre, doesn't understand either?
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