Make disclosure automatic: Whyte

Watchdog Consumer NZ has been campaigning for legislation to restrict an insurer’s ability to cancel a policy on the grounds of non-disclosure, because it says consumers who act in good faith can be penalised.

The Insurance Council has revamped its Fair Insurance Code to include a requirement for insurers to treat non-disclosure reasonably. In cases where non-disclosure is discovered, if a claim is to be paid the insured will have to pay the difference between the premiums they were charged for their policy and what they would have been charged, had they fully disclosed.

But many health insurers are not signatories to the Code, which largely applies to general insurers.

Commentator David Whyte, former general manager of AIA in NZ and managing director of AIG Life in Australia, said there was a need for a more precise framework to manage the issue of non-disclosure for the life insurance industry.
“Having been on both sides of claims cases which have been vehemently disputed by both parties, it make sense to lay down some more precise ground rules to avoid continual subjective interpretation – or misinterpretation – of policy conditions around the non-disclosure issue.”