Tighter insurance laws urged

Press, Volume CXV, Issue 33883, 1 July 1975, Page 3

Tighter insurance laws urged

(New Zealand Press Association)

WELLINGTON, June 30.

Insurance companies and underwriters commonly draw insurance contracts in a manner potentially so unfair to the insured that legislative interference is necessary, the Contracts and Commercial Law Reform Committee has found.

The committee, in a report to the Minister of Justice (Dr Finlay)) on aspects of insurance law, recommends that such changes be made. It recommends more legal protection for those taking out life-assurance policies and insurance on cars and other possessions. The committee said that the detailed terms in an insurance policy were not negotiated — “nor are thev necessarily known'to the insured until he receives the policy document.” “It is sometimes contended by insurers, in opposing reforms of the type recommended, that insurers relv on the strict wording of their policies only when it is morally defensible for them to do »o ■ a ‘Own judge’ “Whether or not this claim is factually correct, such a situation is plainly unsatisfactory, since it permits the insurer to be the judge in his own case.” Some insurers were not reluctant to adopt a harsh or unconscionable attitude, said the committee. “We consider it imperative for legislation to be introduced to cover their activities. Reputable insurers will have nothing to fear from such legislation.” It recommends legislation to ensure that when an insurance agent fills out a policy for a client the agent is

considered a representative j of the company, and not of' the person taking out the in- 1 surance. This legislation would mean that any mis- ' takes made by the agent in filling out the form would not result in the loss of benefits! to the person taking out the insurance. It advocates that where a loss results from an event. unrelated to a circumstance! relied on by an insurance company as a ground for: denying liability, the event should not be taken into account. An example of this recom-' mendation in practice was cited today by I the Justice Department. An insurance policy might not I apply to a vehicle when itl was unsafe. But under the proposed law if an unsafe vehicle were struck from behind while parked the fact I that it was unsafe could not be cited by an insurance com-! pany to avoid liability — because its condition had not contributed to the accident. The committee also recommends that mis-statements made in an insurance policy, whether fraudulent or not, should not void a policy if they were made in relation to a matter immaterial to the risk insured against. The committee was evenly divided on the issue, but agreed to make the recommendation. It also advocates that policy clauses requiring that disputes be settled by. an arbitrator should not be binding. It considers that claims should be heard before a Magistrate or before a Su-

preme Court Judge without a jury. Dr Finlay described the report as balanced and temper- ■ ate. He said that he was i anxious to see the committee’s recommendations implemented as soon as “Parliamentary time would permit.” Many insurers were in substantial agreement with the ; committee’s proposals, and ! “the constructive and helpful attitude it has displayed is to be commended.”