NEW ZEALAND Trends and Developments Contributed by: Kiri Harkess, McElroys
Introduction The New Zealand insurance law landscape in 2025 was very much business as usual, with fundamental changes coming in the next two years as the Con- tracts of Insurance Act 2024 enters into force and is fully implemented, and legislative reforms introduced by the Sixth National Government work through the parliamentary process. Regulation The Conduct of Financial Institutions (CoFI) regime came into full force on 31 March 2025 with the Finan- cial Market Authority ǀ Te Mana Tātai Hokohoko (FMA) taking an expressly outcome-focused approach as regulator of insurers’ conduct. This is expected to continue in 2026. In June 2025, the FMA released its annual Financial Conduct Report, setting out its regulatory priorities for the financial year. For insurers, its regulatory priorities are to ensure that they proactively review products and services, and to engage with them regarding the implementation of the Contracts of Insurance Act 2024 (coming into full force in November 2027). In line with these priorities, the FMA undertook a thematic review of financial institutions’ product and service review practices, published in December 2025. In 2025, the FMA released its review of fire and general insurers’ weather events domestic insurance claims processes for the 2023 North Island weather events – the Auckland Anniversary floods and Cyclone Gabri- elle. These are the largest such events to impact New Zealand since 1968, resulting in almost NZD4 billion damage to insured property. The FMA reported that overall insurers had improved consumers’ claim expe- rience following previous large events, but recom- mended further areas for improvement, particularly in communication with claimants regarding the life cycle of a claim and oversight of third parties engaged by insurers to assist with claims. 2025 saw the conclusion of a number of investigations and civil proceedings by the FMA against insurers and their directors for fair dealing and other breaches. In February 2025, the High Court found former CBL Corporation Ltd (in liq) (CBLC)’s Group Chief Finan- cial Officer to have breached the Financial Markets
Conduct Act 2013 (FMCA)’s continuous disclosure provisions following CBLC’s public listing, imposing a pecuniary penalty of NZD641,250. A related pro- ceeding in respect of CLBC’s IPO is set for trial in April 2026. In July 2025 Southern Cross Travel Insurance admitted liability for fair dealing breaches in respect of misrepresentations about multi-policy discounts and paid NZD1.105 million to the Crown under an enforceable undertaking, in lieu of a pecuniary penalty. In October 2025, the Auckland High Court ordered IAG to pay a pecuniary penalty of NZD19.5 million. In December 2025, the Auckland High Court ordered Tower to pay a pecuniary penalty of NZD7 million. The IAG and Tower civil proceedings followed both insur- ers self-reporting fair dealing breaches relating to pric- ing and discounts, and remediating harm to custom- ers. In each case, the Court accepted that the breach was unintentional. The penalties reflect the quantum of the issue involved, which is naturally greater for a larger insurer. Legislation On 15 November 2024, the Contracts of Insurance Act 2024 received royal assent. The Act fundamentally changes New Zealand’s insurance law, aligning it with the legislative positions in Australia and the United Kingdom. The Act: • modifies insured’s disclosure duties; • introduces proportionate remedies for disclosure breaches; • codifies the duty of good faith; and • imposes new obligations on insurers in respect of claims, plain English policies, and unfair contract terms. The new Act is expected to come into full force by 15 November 2027, though a phased implementation is likely with minor technical amendments to the Finan- cial Markets Conduct Act 2013 already in force. The long lead in time is to enable development of regula- tions and give industry participants time to develop products and systems to comply with the Act. Work on supporting regulations has already begun, with the Cabinet directing in August 2025 that regulations should be drafted prescribing standard form notifica- tions of policyholder disclosure duties, interest rates on life policy death payments, and increasing the sum
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