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Fire and Emergency New Zealand Act 2017

Levy - Avoidance arrangements and shortfall penalties - Joint and several liability of person involved in levy shortfall

111: Joint and several liability of person involved in levy shortfall

You could also call this:

"People involved in a levy shortfall can be liable to pay a penalty together"

Illustration for Fire and Emergency New Zealand Act 2017

You can be liable to pay a penalty if you are involved in a levy shortfall. This includes the insurer, the policyholder, and the insurance intermediary who arranged the contract of insurance. You are liable with the others, which means you can be asked to pay the whole penalty. You are not liable if you were not involved in the contravention or if you relied on information from someone else. You are also not liable if someone else's actions caused the contravention and you took reasonable precautions. The term "arrange" has the same meaning as in section 2(1) of the Insurance Intermediaries Act 1994. If you helped or were involved in the contravention, you are considered to be involved. This means you aided, induced, or were concerned in the contravention. If one person is not liable for the penalty, it does not mean the others are not liable.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7073000.

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Topics:
Money and consumer rights > InsuranceBusiness > Industry rules
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Part 3Levy
Avoidance arrangements and shortfall penalties: Joint and several liability of person involved in levy shortfall

111Joint and several liability of person involved in levy shortfall

  1. Each of the following persons is jointly and severally liable to pay a shortfall penalty under this subpart:

  2. the insurer:
    1. the policyholder:
      1. every insurance intermediary who arranged the contract of insurance.

        1. However, a person described in subsection (1) (person A) is not jointly and severally liable to pay a shortfall penalty under this subpart if—

        2. person A was not involved in the contravention; or
          1. person A’s contravention was due to reasonable reliance on information supplied by another person; or
            1. both of the following apply:
              1. person A’s contravention was due to the act or default of another person, or to an accident or to some other cause beyond person A’s control:
                1. person A took reasonable precautions and exercised due diligence to avoid the contravention.

                2. In this section,—

                  another person does not include a director, an employee, or an agent of person A

                    arrange has the same meaning as in section 2(1) of the Insurance Intermediaries Act 1994

                      contravention means whichever of the following is relevant to the shortfall penalty:

                      1. failing to take reasonable care in the taking of a levy position:
                        1. being grossly careless in the taking of a levy position:
                          1. taking an unacceptable levy position:
                            1. taking an abusive levy position.

                              1. In this section, a person is involved in a contravention if the person—

                              2. has aided, abetted, counselled, or procured the contravention; or
                                1. has induced, whether by threats or promises or otherwise, the contravention; or
                                  1. has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
                                    1. has conspired with others to effect the contravention.

                                      1. The fact that a levy payer is, by reason of subsection (2), not liable for a shortfall penalty does not, by itself, relieve any other person described in subsection (1) from liability for the shortfall penalty.

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