As you may be aware, the Government has decided as part of the review of the Financial Advisers Act 2008 that there will be a universal code of conduct which sets out the minimum standards of conduct, competence and client care for persons giving regulated financial advice to retail clients.
The Government’s decisions around the new code of conduct will be reflected in the Financial Services Legislation Amendment Bill, which is expected to be introduced to Parliament later this year (a draft of the Bill is currently being publicly consulted on). To expedite development of the code, Cabinet has agreed that a Code Working Group be appointed to develop the code in parallel with the legislative process.
The Minister of Commerce and Consumer Affairs is now seeking expressions of interest for positions on the Code Working Group. The group will consist of at least seven members (with no more than eleven), with one member appointed as chairperson. This will include two members appointed based on their experience in consumer affairs or dispute resolution. Other members will be appointed based on their knowledge, skills and experience in the provision of financial services, or in other areas that will assist the Code Working Group to perform its functions.
Members of the Code Working Group will be appointed for a three year term, whereby its members will become the Code Committee under the new regime once the Bill is passed into law.
Interested parties can submit an expression of interest, or read the terms of reference and position description for the Code Working Group, at the MBIE careers centre website.
We encourage you to circulate this information to those you think may be interested in applying. Applications close at 5pm Friday 7 April.
Tim Harford has written on insurance using the title 'what makes gambling wrong but insurance right?' The wide-ranging article then proceeds to tell some of my favourite stories about the origins of insurance. These are all great for engaging an audience, whether that is your next prospect or your next speaking engagement, about the value of insurance.
Harford does a great job because he understands that the value of cover is not merely the claim payment - it is bigger than that. People who own insurance and never claim still gain from it, and he illustrates the way insurance can help grow the economy because it enables people to take reasonable risks without having to worry about being ruined by bad luck.
Back to that question about gambling though; which Harford never entirely answers. Of course, you may be of the view that gambling isn't wrong. But the reality is that, like it or not, insurance and gambling have this in common: they can be used for good and bad purposes, and so they are both regulated industries. That's why insurers like to observe the principle of indemnity when assessing sums insured, it is also why we have laws restricting the cover levels permitted on children. Henry Stern at InsureBlog reports on a case where an underwriter may have not applied that caution. Regulation has always been part of our industry, and to judge by recent developments, will increasingly be a part of it.
The New Zealand Criminal Law Review has an article by Andrew Geddis “The Case for Allowing Aid in Dying in New Zealand.” This thoughtful and detailed review of the subject may be useful to advisers faced with inquiries from clients on the subject, and to insurers that keep track of the debate. We surveyed the attitudes of insurers on the subject in recent months. Three distinct groups of responses emerged. We don't think that there should necessarily be any change required to insurance policies based on the kind of assisted dying envisaged in the Andrew Geddis article.
"The FMA has filed charges against Garry James Patterson in the Christchurch District Court. The FMA alleges Mr Patterson was, or was holding out as being, in the business of providing financial services in contravention of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSP Act). The charges relate to various insurance policies between 1 July 2013 and 28 May 2015. The first Court appearance was today."
"Context-based" is a relatively new concept for insurance which is commonly used in describing a category of insurtech innovations.
Context-based comes in two types, one that doesn't work, and one that does. Risk pooling is essential to insurance. If you cut the pool completely between those that are going to claim and those that aren't, you no longer have insurable risks. Sometimes tech writers unfamiliar with risk-pooling get too excited about the idea of only buying insurance just before you need to claim. That can happen by accident, which is fine, but when it happens by design it is usually fraud.
The version of context-based cover that really does work is, in essence, a way to underwrite from behaviour, rather than the written statements of a highly-partisan human: the insured. Read about this crowd with their vehicle insurance for Tesla owners. Link.
Jenée Tibshraeny at interest.co.nz has written an excellent article on the issue of insurers underwriting people with mental health conditions. I think Tibshraeny does a great job of explaining the consumer position - even advocating for it - while explaining the industry position too.
There is a gap. Some people with mental health conditions may not be treated fairly in the underwriting process, and recent events are, maybe, changing the environment, and insurers are slow to change. They must be, insurers need good data before changing their views, or else they may be exposed to lots of new claims. In Australia there is a problem with income protection, and mental illness is contributing to that. For a complex issue to get covered in this way is both important and rare. I was glad to see it done so well. You can read the article at this link.
Stephen Potter, head of underwriting at Fidelity Life, did a great job of explaining the underwriting process, and in so doing, explaining how it is really good to have an adviser involved.
Everyone's doing it. Apart from the insurance industry... On either side of politics, from comics to consumer companies, from Donald Trump to JK Rowling. People are using social media to engage with their audiences. Even our stodgy old political parties use social media extensively. Even more critically: they respond!
If I post a comment on a twitter stream about Air New Zealand, or Typepad, or Orlando Airport, they respond - usually within hours, often within minutes. I mention those three, because I have, and they did. Good on them all.
But the insurance industry, so wrapped up in itself, complaining about how regulators and ordinary folks don't understand, and yet - when consumers offer to engage on their terms, insurers are nowhere to be found. Take Susan Edmunds' recent article about non-disclosure. Look at the comments section and you'll see lots of this:
Insurers don't pay claims and don't want to
Insurers don't refund premium payments on avoided policies
Insurers don't ask clearly for the information that they want
Insurers don't take into account forgetfulness
Insurers don't take into account information already provided
Insurers don't take into account information they collect from your GP, they would rather hold onto it as a reason to deny a claim later
All of these are demonstrably false, wrong, or not fair on the insurance industry. Examples could be given, links provided to statistics, financial reports, and even videos of claimants posted (like the excellent Mind-the-gap series by the FSC). Why is the industry choosing to pass up this opportunity to engage with their audience? There are few exceptions: nib's CEO Rob Hennin has directly commented on LinkedIn posts, and in other media, Partners Life staff have directly commented on Goodreturns posts.
Tamsyn Parker's article at The New Zealand Herald is interesting: it asks us to imagine a world in which a quarter of the workforce are over 55, and 10% are over 65. This is remarkably both difficult and easy. The hard part is that assumptions, long held, are difficult to change. If you grew up thinking of 65 as retirement age, and seeing all these young people around you then when you're older and you see lots of people staying in the workforce you may be forgiven for wondering what went wrong...
...but actually, a lot went right:
Sixty five years ago life expectancy at birth was more than ten years shorter. In 1840 it was usual for most people to be dead by their middle forties, and a cause for celebration if you were still alive at fifty. So, to give our thought exercise a different twist, imagine a world in which halfthe population are aged more than 82, and most of them are working! That's effectively what has happened over the last 170+ years. With luck, so long as we don't incinerate the planet through war or negligence, it may keep happening. Plus this: