FINANZ backs proposed insurance contract changes

FINANZ backs proposed insurance contract changes | Insurance Business

FINANZ backs proposed insurance contract changes

Financial Advice New Zealand (FINANZ) has announced that it supports the insurance contract changes proposed by the government, emphasising that it would make the process of taking out insurance easier for consumers.

The proposed changes aim to improve the rules around what policyholders must disclose to insurers, address unfair contract terms, and help consumers to more easily understand their policy.

Katrina Shanks, chief executive of FINANZ, said the changes should go a long way towards seeing the end of policies that confused consumers.

“These proposed changes are not before time. A recent survey of our 1680 adviser members showed that among the most common mistakes consumers make when it comes to insurance is not understanding their policy limitation. That generally comes down to how they are written,” Shanks said.

“In fact, some 95% of advisers said the language and complexity of policies make it difficult for consumers to understand them, without specialist advice, while 97% said the language and complexity makes it difficult for consumers to compare policies. Anything that makes policies more user friendly has to be good.”

Read more: Government to make insurance contracts fairer and easier to understand

The proposed changes include placing the responsibility on insurers to ask consumers the right questions when processing new policies, requiring policies to be written and presented clearly, ensuring insurers respond proportionately when consumers don’t disclose information they should have, strengthening protection for consumers against unfair terms, and extending powers to the Financial Markets Authority (FMA) to monitor and enforce compliance with new requirements.

“Overall, these proposals will take a lot of the uncertainty and confusion out of insurance policies,” Shanks said. “From what our advisers tell us, there is clearly a high level of misunderstanding and a lack of understanding when consumers look at insurance, and I’m confident these proposals will help deliver solutions that work and meet consumers’ needs.”