NZI has been keeping an eye on the Consumer Law Reform Bill’s passage through Parliament. Proposals in the bill have implications for carriers’ liability insurance, so Mark Roelink, from Corporate, Niche and Facilities with NZI insurance, gives us the latest.
Most of the proposed changes to New Zealand consumer law that threatened a major impact on carriers’ liability insurance have not survived the latest select committee process.
However, one change still set to go through will result in some increase in premiums for carriers’ liability, due to the higher unit limit it introduces.
The Consumer Law Reform Bill, which was before the Commerce Select Committee, sought to introduce the following major changes, among others:
- application of the Consumer Guarantees Act to the Carriage of Goods Act
- the requirement to offer limited carriers’ risk to consumers in most circumstances.
These changes would have undermined the strict unit limit of liability of the Carriage of Goods Act and exposed carriers to liability, regardless of the contract signed.
The Insurance Council was among those to make submissions to the select committee about the bill’s proposals. After considering submissions, the committee recognised that these changes would have led to increased costs and unintended consequences for consumers.
A good example would be a case where a supplier contracts with the carrier on an “owners’ risk” basis. The goods arrive damaged. The consumer, who has no contract with the carrier, would have been able to pursue the carrier under the Consumer Guarantees Act with no limitation.
To address this kind of situation, the select committee has proposed a change to the Consumer Guarantees Act instead. This change would mean that where the supplier has responsibility for delivery to a consumer, they will also have responsibility for loss or damage in transit. The supplier would have to satisfy the consumer’s complaint, then pursue the carrier for recovery (subject to the carrier’s limit of liability).
The surviving change to the Carriage of Goods Act proposed by the bill is an increase in the limited carriers’ risk unit limit from $1500 to $2000 – probably overdue as the limit has not changed in 22 years.
However, this increase does not come without cost. Insurance premiums for carriers’ liability will increase as a result of the higher unit limit. We won’t know when the change will take effect until the bill has passed its final reading, but it is expected to be in place next year.
Mark is a Marine Manager with the Corporate Niche and Facilities unit here at NZI. Mark has been with NZI since 2010 and has extensive experience in marine risk with previously held positions both in New Zealand and Australia. If you want to know more about NZI’s position on Carriers’ liability under the Consumer Law Reform Bill, leave us a message below.