NEW ZEALAND Law and Practice Contributed by: Aaron Sherriff, Tanya Wood and Nick Laing, Duncan Cotterill
cover, as outlined in 11.1 Emerging Risks Affecting the Insurance Market .
Class Actions Act, which will be the principal source of law for class actions, and for litigation funding to be available subject to approval and monitoring by the court. Unfortunately, this is not a current priority for the government. New Zealand does not currently have legislation that provides a framework for class actions or commercial litigation funding. In the absence of formal frameworks, the courts and opposing parties have sought to navigate these two issues and estab- lish rules for much of the past decade, particularly on claims against companies and directors following the global financial crisis. In 2024, the Natural Hazards Insurance Act 2023 came into effect, modernising and replacing the Earthquake Commission Act 1993. This Act provides a first layer of insurance for residential property, supporting New Zealanders in maintaining access to residential prop- erty insurance despite rising numbers of claims for extreme weather and natural hazard events. The RBNZ has been reviewing the IPSA, and made recommendations for the modernisation of insurance prudential regulation in December 2024. The four key aspects to the reform cover: • a more proactive and intensive approach to super- vision; • treatment of overseas insurers; • statutory purposes and the scope of the legislation; and • policyholder security. The New Zealand government has agreed to the recommendations, and is expected to introduce an exposure draft of the IPSA amendment bill for public consultation in the first quarter of 2026.
12. Developments in Insurance Law 12.1 Significant Legislative or Regulatory Developments The CIA was passed in November 2024. Once in force, it will consolidate and modernise the existing law, replacing and repealing the existing legislation. While many of the provisions have not altered, one of the key changes relates to an insured’s disclosure obliga- tions. For consumer insurance, the responsibility will be on an insurer to ask questions of insureds to obtain the information the insurer requires, with consumers required to “take reasonable care not to make a mis- representation” when answering these questions. Any non-disclosure by consumer or business policyhold- ers will be required to be treated proportionately by insurers, which will usually mean treating the policy as if it were entered into on different terms or for a different premium, rather than it being set aside or cancelled. The Financial Markets (Conduct of Institutions) Amendment Act 2022 was passed in June 2022, and its provisions are now in full effect. It amended the Financial Markets Conduct Act 2013, and requires certain financial institutions (including insurers) and their intermediaries (for example, brokers) to com- ply with a principle of fair conduct and associated duties and regulations. All insurers will have recently re-licensed to comply with these requirements. In June 2022, the New Zealand Law Commission released a report recommending the introduction of a
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