E29 The Insurance Contracts Bill - With Duncan Webb
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Chris Patterson 0:00
Hello and welcome to The Law Down Under Podcast with barrister Chris Patterson. This podcast provides insights into the law in New Zealand and Australia, its application, and its future. Each episode features a new guest who will inspire your interest in the law and give you a greater understanding of the legal issues that help shape our justice system here Down Under. Thank you for tuning in—enjoy the podcast!
On this episode of the podcast, I’m joined by the Honorable Dr. Duncan Webb. He is the Labour MP for Christchurch Central. Dr. Webb currently has in the parliamentary schedule a Member’s Bill seeking to reform and modernize certain aspects of insurance contract law. We discuss his pathway into law, and he shares some of his experiences as an insurance lawyer before becoming a Member of Parliament. We also discuss key aspects of the Insurance Contracts Bill.
This is a fascinating episode for anyone interested in some of the problems and challenges that arise with insurance contracts and the possible future modernization and reform of insurance law in New Zealand. I’m sure you’ll enjoy this episode with the Honorable Dr. Duncan Webb.
Before we dive into today’s discussion, I’d like to take a moment to tell you about an important legal resource—my favorite legal resource, in fact: NZLII (the New Zealand Legal Information Institute). Jump on your browser and type in nzlii.org, where you’ll find free access to New Zealand legal information. NZLII is part of AustLII (the Australian Legal Information Institute) and is a joint project involving the University of Otago Faculty of Law, the University of Canterbury, AustLII, and Victoria University of Wellington’s Law School.
NZLII contains legislative materials dating back to 1841, including historical acts and bills, government gazettes, case documents, royal commission reports, and much more. It’s an incredible resource supported by donations and volunteers. If you’re a lawyer or researcher—or just curious about New Zealand’s legal history—please check it out at nzlii.org.
Now back to today’s episode! I’m joined by former lawyer and current Member of Parliament Dr. Duncan Webb. Duncan joined the New Zealand Labour Party back in 1999 and has served as an MP for Christchurch Central since 2017. He’s a former insurance lawyer, professor of law, and advocate for public interest projects such as freeing innocent people from jail through organizations like the Howard League.
Dr. Webb is also Deputy Shadow Leader of the House, a member of the Justice Committee, co-chairperson of the New Zealand-Middle East-African Inter-Parliamentary Friendship Group, and Labour’s spokesperson on Christchurch issues, justice, Earthquake Commission matters, and regulation.
Today we’ll be discussing Dr. Webb’s Insurance Contracts Bill—a Member’s Bill drawn from Parliament’s ballot box. The bill aims to modernize insurance laws in New Zealand by making insurance contracts fairer and clearer for consumers while addressing several issues within our existing framework.
Duncan, good morning—or actually just gone midday—good afternoon! How are you?
Dr. Duncan Webb 6:34
Good afternoon! Great to be here. After a few technical issues, we’re all set up now and good to go. I’m really excited to talk about insurance contract reform today.
Chris Patterson 6:43
I appreciate you joining us despite those hiccups! Let’s start by discussing your background before diving into insurance law reform. Your family originally immigrated from the UK to Christchurch—what was your pathway into law? Were there lawyers in your family?
Dr. Duncan Webb 7:41
No lawyers at all! My path wasn’t so much a pathway as it was stumbling through undergrowth! I left school early—it didn’t quite fit for me—and ended up cycling across town in Christchurch to see if I could still enroll at university. Turns out I could! I flipped through an enrollment book at the registry desk, ran my finger down it randomly, and picked a few subjects—law being one of them.
Chris Patterson 8:20
So this was at the ripe old age of 17 or 18?
Dr. Duncan Webb 8:24
I was only 17 at the time—not yet 18—and scraped through my first-year papers by sheer luck! But something about law intrigued me—it’s such a unique area of academic inquiry that blends social science with practical application.
Chris Patterson 9:00
I understand you weren’t exactly an A+ student during your undergraduate years—you even failed contract law on your first attempt?
Dr. Duncan Webb 9:12
Yes! It’s hard to ace an exam when you’re asleep! I accidentally slept through my contract law exam due to what we’d now call “a scheduling error.” By the time I woke up—and considering it was a 40-minute bike ride across town—I realized there was no way I’d make it in time to finish even half the exam.
Dr. Duncan Webb 9:27
Exactly. There was very much an oversight on my part. By the time I realized, it was too late to salvage anything. But I must say, other than the lame law lecturer jokes, the lectures were great the second time around.
Chris Patterson 9:53
And of course, that experience is probably permanently emblazoned in your mind—it must have shaped your understanding of contract law!
Dr. Duncan Webb 10:01
Absolutely. Maybe that’s why we’re here today discussing insurance law—it’s a subset of contract law in many ways. Back then, Professor John Burrows was teaching contract law, and he was brilliant. He had a knack for making complex concepts accessible.
Chris Patterson 10:19
We’ll come back to insurance law in a moment, but let’s talk about your academic journey. You went on to earn a doctorate—what led you to pursue that?
Dr. Duncan Webb 10:32
I actually have a Doctor of Laws rather than a PhD, which is a bit of a niche in academia. Instead of writing a new thesis, you submit work you’ve already published as a body of research. It’s an economical way to earn a doctorate! My focus was professional ethics—I wrote a book on it, helped the Law Society draft professional rules, and published articles over the years. After 10 or 15 years in academia, if you haven’t produced enough material to demonstrate mastery in your field, you’re probably in the wrong job! I’m proud of that work—it was meaningful and impactful.
Chris Patterson 11:21
Fantastic! As it happens, I have your second edition here—not your first edition, but the improved second edition. It’s an excellent resource; I keep it within arm’s reach at all times.
Dr. Duncan Webb 11:43
For those listening rather than watching—Chris is holding up a pristine copy of my book that looks like it’s never been opened! Either he treasures it or doesn’t use it often.
Chris Patterson 11:58
Actually, I was disappointed when your assistant said you’d be joining remotely—I had hoped to get my copy autographed! Maybe next time.
Dr. Duncan Webb 12:15
We can arrange something. There’s always an oddball out there who wants me to sign something every three or four months.
Chris Patterson 12:20
Look, maybe that’ll be another podcast and another time. But let’s move into the area of insurance contracts. Look, I think I’ve already foreshadowed this, and that is—is there such an area of law? I know there are literally hundreds of insurance lawyers out there who say they’re insurance lawyers. And your CV says you’re an insurance lawyer. Is there actually an area of insurance law, or is it just a subset of contract law?
Dr. Duncan Webb 12:55
That’s a bit formalistic, yeah. The question presupposes that there are divisions in the law, and obviously, there are lawyers who specialize in working for, say, insurance companies. When I was a lawyer, I specialized in working essentially against insurance companies. You certainly learn a set of skills that are really relevant in terms of the discipline itself.
For example, I became an expert in building law because I was doing a whole lot of homeowner claims. So you get these conceptual boundaries that come into shape—it’s like either there’s a practical area (e.g., transport law or building law) or there’s a conceptual area (e.g., contract law or tort law). Insurance law is probably more of a practical demarcation; it tells you about the industry you’re working in rather than the conceptual tools you’re working with.
If you’re an insurance lawyer, quite often you’re dealing with a lot of tort law, contract law, and other areas as well. But at the end of the day, if you’re talking about how insurance works, it’s all about contracts. That’s why one of the biggest pieces of advice I used to give homeowners was simple: “Go and read your contract.”
Chris Patterson 14:25
And to be fair, if we think about insurance law—or let’s call it insurance contract law—there is a difference between marine insurance principles and non-marine insurance principles. Your bill is very much focused on non-marine insurance because marine has its own archaic set of rules that have come about over literally hundreds of years, mainly from the United Kingdom. Have I got that right?
Dr. Duncan Webb 15:03
Yeah, absolutely. I’m not an expert in marine insurance—though I have dabbled—but it’s important to have international consistency there. This bill focuses on domestic insurance—fire and general insurance, life insurance—that sort of thing.
The bill has a real consumer focus overall. It draws distinctions between consumer and non-consumer insurance.
Chris Patterson 15:25
Before we get deeper into it, let’s talk about what an actual insurance contract is. Maybe we can use an example: say we go to the Riccarton Racecourse for the races. People are betting on which horse will win—that’s gambling. But if I say to my broker, “I want to insure my racehorse so it doesn’t die during the third race,” what makes that different from gambling?
Dr. Duncan Webb 16:27
The key difference is insurable interest—you need to have some kind of financial or personal interest in what you’re insuring. If all you’ve got is a speculative interest (e.g., betting on a horse), that’s gambling.
But it gets tricky when you dig deeper—for example, if you’re growing wheat and want to insure against price drops due to weather conditions. That could look like futures trading or derivatives rather than traditional insurance.
Chris Patterson 16:27
Yeah. I mean, I guess the element there—and you're making me dive back into my law lecturing days—is the kind of interest that you've got. If all you've got is a speculative interest, where it’s a windfall if the horse wins and you just lose your stake if it loses, we know what that is: it’s gambling, right?
Having said that, as soon as you start scratching a bit further and deeper, it becomes a little less clear. For example, if I’m growing wheat and I want to insure against the price of it falling, that looks like I’ve got an interest. But it also looks a bit like a futures contract or a derivative, which is a financial instrument. And it also looks a little bit like I’m gambling about the weather as well. So who knows, right?
Chris Patterson 17:17
Look, I’ll share with you—and maybe we can build on this—it might have been a dinner in Sydney that I had with a couple of underwriters. We may have actually drunk quite a lot of red wine. In fact, I know for a fact that I paid for it all, so there was actually quite a lot that they drank! But one of them said to me—he was a very experienced underwriter with one of the large listed Australian underwriters—“I’m paid this amount of money,” and it was almost eye-watering. I thought, “I’ve obviously made the wrong decision becoming a lawyer; I should have become an underwriter.”
He said, “I’m paid a lot of money to be a professional gambler.” And that got me thinking about the nature of insurance contracts. For example, most people who own homes will have their houses insured—and you’ll know a lot about this because of your background—but there’s always this gamble going on. The insurance underwriter is saying, “Well, I don’t think you’re going to suffer a loss,” and you as the homeowner are hoping they’re right.
Dr. Duncan Webb 18:23
Well, the gambling stopped—I forget the exact date—but wasn’t it in the late 1700s when life insurance was invented by Scottish Widows?
Chris Patterson 18:34
You’re familiar with the story?
Dr. Duncan Webb 18:37
Yes! Someone went through death records in Scotland and worked out what the rough actuarial probability was of dying. Gambling stopped on that day because with a high degree of certainty, they knew that if they had a pool of people large enough who were all telling the truth roughly about their age, they could take money off them and profit from it. Actually, it was originally set up as a not-for-profit organization, which is lovely as well.
But this principle applies to all kinds of insurance—whether life insurance or fire and general insurance. The challenge now is that information has become so good that where risks are too high, pooling them in traditional ways is no longer feasible.
Chris Patterson 19:29
Yeah, and with advancements in medical science and technology, those insuring for life or income protection now have unprecedented levels of data to work out statistically when someone like Duncan Webb—at X age who doesn’t smoke—is likely to die.
Dr. Duncan Webb 19:52
Exactly. And at the moment, there’s still a moratorium on using DNA testing for insurance purposes. But imagine what would happen if insurers could use pinprick DNA tests to assess risks—it raises real questions about privacy and ethics.
Chris Patterson 20:08
And privacy issues would definitely come into play as well.
Dr. Duncan Webb 20:13
Exactly. I’ve even had an email from someone at Auckland University Medical School raising concerns about medical ethics in life insurance linked to these advances.
.
Chris Patterson 20:27
Fair enough! Let’s dive into this bill now. By way of background, most pieces of legislation are there to resolve some mischief or try to make the world a better place. What’s the background for this bill? Why is it needed?
Dr. Duncan Webb 20:46
Yeah, look, I guess there are a number of ways I could answer that. The kind of Law Commission way would say that the prudent insurer test around misrepresentations was creating some real injustices in how insurers treated policyholders if they made a mistake when taking out insurance.
But stepping back, insurance has transformed—it’s no longer a contract between roughly equal parties. It’s a standard form contract that buyers never read and sellers spend enormous amounts of time crafting to make their businesses work. To level the playing field for consumers, we need carefully drafted rules, which is why this bill addresses more than just fixing the prudent insurer test.
Chris Patterson 22:01
Okay, so it’s trying to strike the right and fair balance. Is that a good way of putting it?
Dr. Duncan Webb 22:07
Yeah, absolutely. At the same time, it’s about ensuring the market still works effectively and efficiently without imposing undue costs that would drive up premiums for everyone.
Chris Patterson 22:37
Exactly. It’s not just about costs—it’s also about ensuring insurance remains available. If things become too difficult for insurers, they might withdraw certain products altogether, which are necessary for commerce and consumer protection.
Dr. Duncan Webb 22:37
Exactly. It’s not just about costs—it’s also about ensuring insurance remains available. If things become too difficult for insurers, they might withdraw certain products altogether, which are necessary for commerce and consumer protection.
Chris Patterson 23:04
Yes, I agree. And in New Zealand, insurance plays a critical role in our economy, but it’s different from other countries. For example, our health insurance system isn’t as extensive as in the United States because we have a public health system. Similarly, our home insurance system is supported by EQC (the Earthquake Commission) and its natural hazards framework. It’s an ecosystem that works together.
Dr. Duncan Webb 23:49
That’s right. But we also need to be cautious about large businesses using their power to undercut consumer protections. The balance has to be carefully managed to ensure consumers are adequately protected without stifling the market.
Chris Patterson 24:10
Absolutely. Let’s talk about the duty of disclosure and utmost good faith—key principles in insurance law. Historically, this duty arose because the insured had more knowledge about the risk than the insurer did. But with modern technology and data analytics, that imbalance has shifted, hasn’t it?
Dr. Duncan Webb 25:20
Yes, that’s exactly right. The duty of disclosure originated in marine insurance centuries ago when merchants knew far more about their cargo and risks than insurers did. Today, with advancements in data collection and analysis, insurers often know more about risks than consumers do—especially with health or life insurance.
For example, insurers now use detailed questionnaires to assess risk and have access to population-level data that consumers don’t. The idea that consumers have all the knowledge and insurers don’t is outdated.
Chris Patterson 27:44
I heard a story recently about a woman who had been paying income protection insurance for over a decade but failed to disclose a period of teenage depression decades earlier. When she made a claim after an accident unrelated to her mental health history, her insurer declined it due to non-disclosure. That seems incredibly unfair.
Dr. Duncan Webb 28:44
That’s exactly the kind of situation this bill aims to address. Under the proposed changes, if the insured acted reasonably at the time and wasn’t negligent or fraudulent, they would still be entitled to some remedy—even if they failed to disclose something unintentionally.
The insurer might adjust the claim based on what they would have done had they known all the facts—for example, charging a higher premium—but they wouldn’t be able to deny coverage entirely.
Chris Patterson 29:48
That seems like a fairer approach—one that reflects practical realities. Most people filling out insurance declarations don’t know what every insurer might consider material or relevant.
Dr. Duncan Webb 30:44
Exactly. Consumers can’t be expected to second-guess what an underwriter considers important—especially after answering dozens of detailed questions on an application form. This bill shifts some of that responsibility back onto insurers by requiring them to ask clear and specific questions.
Chris Patterson 31:14
And hopefully, this will reduce disputes between insurers and policyholders because disputes can be incredibly corrosive—both financially and emotionally.
Dr. Duncan Webb 31:41
Absolutely. I saw firsthand during the Canterbury earthquakes how devastating disputes could be for homeowners waiting years for resolution. Litigation often leaves people worse off financially—even if they win their case.
This bill also prohibits pre-dispute arbitration clauses in consumer contracts unless both parties agree after an issue arises. Arbitration can sometimes disadvantage consumers by being less procedurally fair or more expensive than court proceedings.
Chris Patterson 35:07
That makes sense—arbitration is great in some contexts but not always suitable for consumer insurance claims.
Let’s talk about brokers briefly. Your bill addresses situations where premiums paid to brokers don’t reach insurers—a problem highlighted by cases like Herbert Insurance Group’s collapse.
Dr. Duncan Webb 37:34
Yes, under this bill, payment to a broker will be considered payment to the insurer—ensuring policyholders aren’t left uninsured due to issues with intermediaries like brokers.
Chris Patterson 38:53
That’s a sensible change—it clarifies relationships between brokers, insurers, and policyholders while protecting consumers from losing coverage through no fault of their own.
Dr. Duncan Webb 40:22
Exactly. The bill also modernizes other areas of insurance law—for example, allowing third parties to bring claims directly against insurers in cases like directors’ liability or life insurance payouts.
Chris Patterson 43:27
It sounds like this bill has broad implications for improving fairness and efficiency in New Zealand’s insurance industry while aligning our laws with international standards.
What’s next for the bill?
Dr. Duncan Webb 43:57
The next formal step is its first reading in Parliament—I’ll present it and advocate for cross-party support since Labour is currently in opposition. If it passes its first reading, it will go to select committee for further refinement before returning to Parliament for debate and voting.
Chris Patterson 45:35
It sounds like you’ve got your work cut out lobbying for support—but this bill seems like common sense reform that benefits everyone involved in insurance contracts.
Duncan Webb, thank you so much for joining me on The Law Down Under Podcast. It’s been an absolute pleasure discussing your Insurance Contracts Bill—I’ll be watching its progress closely!