Overview Of Key Legislation Flashcards
There are two Insurance Law Reform Acts- The first from —- and the second from —-?
1977 and 1985.
Insurance Law Reform Act 1977 deals principally with administrative aspects of insurance policies. The 1977 act provides guidelines for interpreting what?
1- MISSTATEMENTS of information made in proposals
2- The binding effect of ARBITRATION clauses
3- TIME limits for claim notification
4- How a representative of the insurer is defined- AGENCY
5- The ineffectiveness of EXCLUSION clauses
Prompt- MATAE
Under the insurance law reform act 1977, discuss section 5 and section 6?
Section 5-
In general insurance, a policy may be avoided if the statement made in support of the policy by the insured was:
- substantially incorrect
- material
Section 6-
A statement is ‘substantially incorrect’ if the difference between what is stated and what is actually correct would have been considered material by a prudent insurer.
A statement is ‘material’ if it would have influenced the judgement of a prudent insurer fixing the premium or deciding whether or not to take the risk.
Under the insurance law reform act 1977, discuss section 8?
Arbitration Clauses- Under section 8, a contract cannot bind individual insureds to take a dispute to arbitration. The main purpose of this is to ensure that the insured is not forced to accept the decision of an arbitrator without the further option of litigation. However, insureds can be bound to go to Arbitration if they are ‘in trade’, i.e- commercial/business persons.
Under the insurance law reform act 1977, discuss section 9?
Time Limits- Before the insurance law reform act 1977, the insurer could decline the claim if the time limit was not met. Under section 9 of the act, the insurer must now show it suffered prejudice or that it was disadvantaged as a result of an insureds failure to comply with the time limit.
Under the insurance law reform act 1977, discuss section 10?
Agency- Under section 10 of the act, an insurer that provides coverage to a client through an intermediary, is deemed to have material knowledge of all facts made known to the intermediary by the client. This means insurers are obliged to indemnify the insured even though they are not in possession of the material facts.
With regard to section 10 (agency), what rights to recover costs from intermediaries do insurers have?
1- Insurers have the right to recover costs from an intermediary in the case of an intermediaries negligence in failing to provide the insurer with the material facts
2- Or in the case of a breach of the intermediaries agreement with the insurer to transfer all material facts to the insurer
Under the Insurance law reform act 1977, discuss section 11?
Certain Exclusions Forbidden- Before the 1977 insurance law reform act, exclusion clauses sometimes enabled an insurer to exclude or limit liability if certain circumstances existed at the time of the loss. Now, if on the balance of probabilities the loss was not caused by the excluded event or circumstance, the exclusion clause will not apply.
Under section 11 of the insurance law reform act 1977, what are the two tests that can be applied to determine if certain exclusions can apply?
1- Whether, in the insurers view, the insurers liability has been defined because the happening of the events or the existence of the circumstances is likely to increase the occurrence of the loss(whether the events or circumstances are likely to have increased the chance of the damage occurring).
2- Whether the loss, in respect of which the insured seeks to be indemnified, is caused or contributed to by the happening of the events or existence of the circumstances(whether events or circumstances have directly or partially caused the loss).
With regard to section 11 of the law reform act 1977, who is the onus on to prove whether or not the loss was caused or not caused, by the happening of such events or the existence of such circumstances?
The insured.
What were the key inclusions in the insurance law reform act 1985?
1- INSURABLE interest
2- Rights of house PURCHASERS where the property is damaged after the sale agreement, but before settlement
3- Limiting the insurers right to apply AVERAGE
Prompt- IPA
Under the insurance law reform act 1985, discuss sections 6 and 7?
Insurable Interest- This section discusses insurable interest and who can have insurable interest in the property.
Section 6 of the act abolishes the need for a formal insurable interest in indemnity insurance when the policy is first taken out, and Section 7 replaces it with the requirement that the claimant must actually suffer a financial loss.
Under the insurance law reform act 1985, discuss section 13?
Rights of house purchasers- Section 13 of the act provides that the insurance policy of the house vendor applies also for the house purchaser between the signing of the sale and purchase agreement, and the settlement, provided the purchaser has no other insurance.
Under section 13 of the insurance law reform act 1985, discuss the extent and limitations of coverage the purchaser is entitled to with regards to the vendors policy as well as the purchasers policy.
The purchaser receives no more cover then the existing policy of the vendor, if the house was underinsured the purchaser would only receive what the vendor would’ve been entitled to.
If the purchaser has insurance but it is insufficient to meet the whole of the loss, any shortfall may be recovered from the vendors insurer.
Under the insurance law reform act 1985, discuss section 15?
Average- Limits insurers abilities to apply average, by prohibiting placing a condition of average in to contracts relating to residential property.
Under the insurance law reform act 1985, discuss section 16?
Average- Section 16 states that an ‘average’ clause shall be of no effect unless, before the contract is entered into, the insurer clearly informs the insured in writing of the nature and effect of this condition.
Where it is not reasonably practical for the information to be given in that form before the contract is entered into, the insurer must give the insured the information orally at the time and follow this up in writing as soon as reasonably practical.
Identify 3x specific acts with regard to consumer protection legislation in New Zealand?
1- Commerce Act
2- Fair Trading Act
3- Consumer Guarantees Act
What is the purpose of the commerce act 1986?
The act encourages FAIR and ETHICAL COMPETITION and efficiency in business for the long-term benefit of consumers and aims to give consumers genuine choices in PRICES, QUALITY and SERVICE.
In relation to goods and services, it REGULATES ARRANGEMENTS or UNDERSTANDINGS between competitors that substantially lessen competition and restrict an open market.
It also covers anti-competitive (as opposed to unfair) trade practices, mergers and takeovers, and price controls.
What does part two of the commerce act 1986 deal with?
1- Price fixing
2- Practices which substantially lessen competition
3- Use of a dominant position in a market
4- Restrictive trade practices
5- Resale price maintenance
Prompt- PPURR
Under the commerce act 1986, discuss section 36?
Market dominance- This section prohibits a person who has a substantial degree of power in a market from abusing their power. Unless authorised under the act, businesses in a dominant position are in breach of the act if they use that position for the following purposes-
- Restricting entry of another person into that or any other market
- Preventing or deterring competitive conduct in any market
- Eliminating a person from any market
