Legal and regulatory update for the life and health insurance sector

30 June 2022 – IRD released its compliance focus on offshore tax transparency, together with guidance to assist tax agents in complying with the international rules. https://www.ird.govt.nz/media-releases/2022/offshore-tax-transparency-compliance-focus

30 June 2022 – XRB release indicating that it is now a month away from releasing the third and final consultation of the suite of Climate-related Disclosure Standards. https://www.xrb.govt.nz/news/pitopito-korero/

30 June 2022 – The latest FMA update highlighted the release of the Financial Markets Conduct (KiwiSaver Confirmation Information) Methodology Notice 2022, which sets out how providers must calculate fees paid by investors, for disclosure in KiwiSaver annual statements. https://www.fma.govt.nz/compliance/guidance-library/financial-markets-conduct-kiwisaver-confirmation-information-methodology-notice-2022/


Revenue survey reveals both encouraging and worrying news

Recently we completed a search for the public disclosure documents of more than 1,000 Financial Advice Providers and did an in-depth analysis of the public disclosure documents. Results were both encouraging and worrying.The survey includes data on:

  • The scope of advice services offered
  • Sources of revenue
  • Revenue sources by advice services offered
  • Product providers advice can be provided on
  • Extent of use of fees
  • Fee types and amounts
  • Hourly rates chargeable

It was worrying some aspects of the disclosures were inadequate, some merely hard to find. It was encouraging to see a wider diversity of revenue sources and charging mechanisms than had been feared, indicating some awareness of the challenges possible in an environment where upfront commission may be under pressure. Highlights of the research will be available to subscribers to our quarterly life and health report, coming to corporate subscribers in the next few days. Full survey results will be available to subscribers to our quarterly remuneration survey.


CoFI passes in Parliament, and other news

The Financial Markets (Conduct of Institutions) Amendment Bill (CoFI), has been passed in Parliament. CoFI aims to ensure that financial institutions and their intermediaries comply with a principle of fair conduct and associated duties and regulations.

Minister of Commerce and Consumer Affairs David Clark, said the passing of the bill “will establish a new financial conduct scheme that ensures financial institutions put customers before profits”

The FMA welcomes the new bill, with Samantha Barrass, Chief Executive saying

“This will enhance the culture of core financial services in New Zealand, with a focus on putting conduct and the fair treatment of customers at the heart of every business. Firms will be held to account by the FMA for the way they sell products and look after their customers. This brings New Zealand into line with comparable countries overseas."

“It is critical that consumers get the financial products and services they need throughout their life and receive fair treatment in all their dealings with financial institutions. Consumers should have trust and confidence that the institutions who sell products and services to them will always do the right thing.”

“While fund managers, derivatives issuers, and advice providers are already subject to FMA licensing, the same supervision and monitoring powers will now apply to banks, insurers and NBDTs,”

More daily news:

Insurance Business recognises business development managers

Curated Risk introduces professional liability programs for smaller FAPs

ANZIIF's Liability Conference to be held 27 July

Financial services sector records higher number of cyberattacks than any other industry group

Survey finds Covid-19 has impacted SME business holders’ wellbeing


Legal and regulatory update for the life and health insurance sector

28 June 2022 - Financial Markets (Conduct of Institutions) Amendment Bill completed third reading in Parliament.

https://www.beehive.govt.nz/release/govt-passes-law-protect-consumers-banking-and-insurance-sector

https://www.fma.govt.nz/news-and-resources/media-releases/culture-shift-for-financial-services-cofi-bill-passes/

https://www.mbie.govt.nz/about/news/new-financial-conduct-regime-will-ensure-customers-are-treated-fairly/

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_93443/financial-markets-conduct-of-institutions-amendment-bill

29 June 2022 – RBNZ released a statement outlining that, at a meeting of South Pacific Central Bank Governors on 20 June 2022, the Governors reconfirmed their commitment to supporting the region’s access to cost effective remittances, retention of bank services and improving financial inclusion. https://www.rbnz.govt.nz/hub/news/2022/06/central-banks-committed-to-economic-prosperity-and-wellbeing-in-south-pacific


Database version 14.8 is now live!

It has definitely been a big year for the Quotemonster team! 

We have recently released an updated version of the QPR database to Quotemonster which contains the following updates: 

  • New policy document versions for Accuro, AIA Private Health, ANZ Bank, and AA Health 
  • Research ratings for ASB Private Health are now available 
  • Minor reviews in Income and Mortgage Protection for Offsets, Dependent Leave without Pay, and Partial Disability amount score  
  • Minor reviews in Trauma for Survival Definition, Trauma Buyback, Cardiac Arrest, and Coma 
  • Full re-rates in Trauma for HIV, Benefit Payment, and Loss of Independence 
  • Minor reviews in TPD for Special Events and Benefit Definition over 65 
  • Minor reviews in Medical for Exclusions
  • Full re-rates in Medical for Mental Health, Second Opinion, Grief and Funeral Support, Network or Market Price Limits/UCR, Product Flexibility, and Loyalty Benefits 

Legal and regulatory update for the life and health insurance sector

27 June 2022 – The Financial Advice Code website was updated to include the names of the two new Code Committee members appointed in April 2022, being Karen Coutts and Erin Jurgeleit. https://financialadvicecode.govt.nz/about-the-code/

27 June 2022 – Law Commission published its final report on class actions and litigation funding. https://www.lawcom.govt.nz/media-release/law-commission-publishes-final-report-class-actions-and-litigation-funding

28 June 2022 – FMA released its 2021 NZX obligations annual review. https://www.fma.govt.nz/news-and-resources/media-releases/fma-publishes-nzx-obligations-annual-review-2022/

27 June 2022 – The Financial Advice Code website was updated to include the names of the two new Code Committee members appointed in April 2022, being Karen Coutts and Erin Jurgeleit. https://financialadvicecode.govt.nz/about-the-code/


Hospitals and urgent care facilities under pressure, and other news

Hospitals and urgent care facilities are under pressure, from influenza, Covid-19 and other respiratory illnesses. As of today, there are 383 cases of Covid-19 in hospitals across NZ. Hospitalisation rates for severe acute respiratory infections are exceeding rates for this time of year over the previous seven years. A Waikato DHB staffer spoke to Stuff, under conditions of anonymity, saying hospitals are not coping.

They said the key issues causing stress to the health system were inadequate staffing numbers and underfunding from successive governments.

They also said staff were not immune to Covid and the flu, which was exacerbating the staffing shortages.

Yesterday the government announced expansion of funded access to the flu vaccine, to cover people with specific mental health conditions and/or additions issues as well as children ages 3 – 12. Epidemiologist and University of Otago (Wellington) Professor Michael Baker praises the government’s move to expand free flu vaccine access but is asking ‘why not make it free for everyone?

Workplace flu vaccination programs are one of the most common forms of employee wellbeing assistance. It is often covered by health insurance or is an action that is rewarded by systems such as AIA Vitality. Employers running wellbeing programs for staff report to us that it is one of the best value interventions. Estimates at effectiveness range from 30% to 60% in terms of preventing infection.

More daily news:

Study finds more than 19 million lives saved in first year of rollout of COVID-19 vaccines

Ministers to review whether orange traffic light setting should be changed

US FDA approves Covid-19 vaccinations for children over 6 months old

BNZ gives tips on how relationships can be financially healthy #ItStartsWithAction

ACC updates client payment rates

Economists say NZ recession almost certain, could trigger brain drain


Medical Assurance Society launches new policy document technology

Medical Assurance Society has launched some cool new policy document technology. In summary:

  • They have recently completed our plain language review of policy documents
  • They have gone to an omnibus documents - for example creating a single document for their Professional Life Plan (PLP) where previously they had five documents
  • They are delivered electronically to - and they no longer print physical documents

I have checked out some of the changes and the ones I particularly like are:

Although I am not normally a fan of omnibus documents that contain wordings for every possible benefit, and you have to check your schedule to see which are include and which are not, MAS gets around one of the disadvantages with the internal menu system - so you  can easily jump to the right section for what you are covered for.

The other feature I really like is displaying the meaning for defined terms at the bottom of every page in which it is used.

Congratulations to Phil Belcher and everyone at MAS that was involved in the upgrade.

Example page below:

MAS policy document sample page June 2022

 


FMA says cyber security must be a priority, publishes info sheet, and other news

The Financial Management Authority (FMA) says cyber security must be a priority for the financial sector. The FMA has published an info sheet to help financial services firms enhance the resilience of their technology and operational systems and meet relevant license obligations.

The Info sheet covers: how to self-evaluate your cyber resilience against the NIST cybersecurity framework functions (identify, protect, detect, respond, recover); understanding the threat landscape and key risks; reviewing your supply chain risk; governance recommendations; training; ensuring incident response and management plans are in place; how to notify any threats; remediation for customers; and post incident reporting.

The FMA reminded the financial industry of two obligations that are part of its licencing regime:

“to have, at all times, adequate and effective systems, policies, processes and controls that are likely to ensure you will meet your market services licensee obligations in an effective manner.”

“IT systems used to deliver the licensed market service must be secure and reliable. Your arrangements ensure they perform efficiently and the associated risks are managed.”

Chartered Accountants Australia New Zealand have also created a hub with info, tools and resources to help SMEs strengthen their cyber resilience and manage a cyber attack.

NZ’s national cybersecurity agency, CERT NZ, says that phishing is the most commonly reported cyber scam in NZ, making up almost 71% of all reports.

Craig Weber, insurance practice leader at Cognizant, writes in Insurance Business Mag that due to increased working from home, the surface vulnerable to cybersecurity threats has increased and that insurers are working at capturing that data and building it into their risk and analytics.

More daily news:

Financial Services Complaints Limited (FSCL), win legal battle to use the title of “ombudsman”

The Adviser Platform (TAP) extends CRM platform to mortgage advisors

NZ government expanding access to flu vaccine and second covid-19 booster doses

Financial Advice Code Committee names new members: Karen Coutts and Erin Jurgeleit

Survey finds several hundred thousand NZ homes cold, damp, expensive to heat

Employees prefer hybrid model of work


Legal and regulatory update for the life and health insurance sector

23 June 2022 – FMA published an information sheet to help financial services firms enhance the resilience of their technology and operational systems, and meet any relevant licence obligations. https://www.fma.govt.nz/news-and-resources/media-releases/cyber-security-priority-financial-sector/

A couple of news articles out of Australia that I thought might interest you relating to industry body changes for life insurance.

June 2022 - Australia’s life insurance industry announces new peak body: https://www.moneymanagement.com.au/news/liferisk/australia%E2%80%99s-life-insurance-industry-announces-new-peak-body

June 2022 - Australia's FSC introduces new mandatory Life Insurance Code of Practice: https://www.moneymanagement.com.au/news/liferisk/fsc-introduces-new-mandatory-life-insurance-code-practice


Quotemonster training session!

We invite you to join our next training session with Kelly, our National Partnerships Lead, which takes place on Monday, 4 July 2022 10:30 AM-11:30 AM. 

In this introductory session, we will go over the basics of using the website including: 

  • How to directly compare two insurers for replacement business (Head-to-Head) 
  • How to download our detailed comparison and client friendly benefit overview or heat map report
  • How to add banks and non-adviser companies to your Research comparison 
  • How to find older policy documents

...and you’ll get a look at our new website.

All Industry members are welcome to join this session so please register your interest by emailing us on info@quotemonster.co.nz

Please feel free to contact us if you're also interested in a 14-day Research trial!

Happy Crunching!


Businesses’ insurance cover not keeping up with COVID-19 related changes, and other news

Insurance Business Mag spoke to Chris Brophy about businesses’ insurance cover in a post-pandemic world. Vero’s annual SME Insurance Index finds only 10% of small and medium sized enterprises (SMEs) working with brokers have made changes to their insurance, despite 79% of SMEs having made changes to their business.

Chris Brophy, executive manager, business at Vero, said the identification of this gap provides an opportunity for brokers to reach out to their SME customers and provide additional value. While the changes may be temporary for some business owners, for others they reflect a “new normal” where their insurance is no longer providing adequate cover.

Brophy also urged brokers to build trust and strengthen their relationship with SMEs, to see how each clients’ business has been impacted, and then provide advice to best suit their business needs.

With more than 90% of FAPs being SMEs, Russell Hutchinson says advisers should take this opportunity to “review their business cover themselves”.

More daily news:

David Clark says the COFI bill will crack down on sales incentives

Insurance Business NZ's Fast Brokerages 2022 report highlights three small brokerages that are thriving

Australia's life insurance companies form dedicated industry body: The Council of Australian Life Insurers (CALI)

Hugh Grant discusses marketing ideas for insurance companies to sell more

FSC releases June Regulatory Outlook and Year in Review for members


Could mortality be improved in NZ? And other news

Chatswood Consulting have taken a look at leading causes of death to identify areas where substantial life expectancy improvements could be made. We focused our analysis on reducing deaths during working life (from age 20 to 64). There are 2,562,000 normally resident New Zealanders in that age range. In 2019 there were 5,787 deaths in that age group. The top five causes of death are:

• Neoplasms (cancer)

• Cardiovascular diseases

• Self-harm and interpersonal violence

• Transport injuries

• Diabetes and kidney diseases

We compared New Zealand’s performance to the OECD average and then, where we already exceeded the average, to a country that is similar to ourselves in income per capita that has the best performance (lowest working life death rate) for the particular cause of death.

179 female cancer deaths per year could be prevented if New Zealand were just able to bring our cancer experience up to the level of the average for the OECD.

Were we to improve to the best performance in the OECD with cardiovascular disease we could reduce working life deaths by 595 lives per year.

NZ’s performance is already above the average for the OECD for transport injuries, but if we were to improve to the level of Ireland, we could save 95 deaths per year.

With diabetes the potential gains to the best performer in the OECD would save 69 deaths per year.

Our report details some of the known risk factors in each of these categories, possible opportunities for improvement, and the number of live that could be saved.

How can insurers help?
The insurance industry could lobby government to affect policy changes. Communicating directly with their customers to provide education, advise lifestyle changes which could provide benefits or even incentivise customers through things like fitness targets met result in lower premiums. Catching conditions early can also reduce mortality – special offers for screening health care services such as breast screening and mole maps could be incorporated into policies.

If you already subscribe to a Chatswood news or data product, just let us know if you would like a copy of the report, and we shall send it free of charge. If you are not a subscriber, please contact Kelly.pulham@chatswood.co.nz to obtain pricing information.

Already, several insurers promote good health. Some have more formalised programmes than others: such as AIA Vitality. A few have joined health initiatives, particularly those supporting good mental health, quitting smoking, and increasing activity levels. If you are interested to explore opportunities for the sector to engage more in this area, please drop us a line to arrange a time to talk.

More daily news:

FANZ members can now receive discounts at range of suppliers

Chartered Accountants have created a hub to help SMEs strengthen their cyber resilience

FANZ adds new dates for Professional Ethics Workshop

Consumer confidence slumps, rising living costs squeeze household budgets

Tim Grafton says the role of insurance in protecting us from climate impacts is not well understood

Resolution Life Australasia appoints Chief Customer and Operating Officer; General Manager NZ 

ACC appoints Andy Milne Deputy Chief Executive of Strategy, Engagement and Planning

The Advisor Platform offers group scheme for Professional Indemnity Cover


Legal and regulatory review for the life and health insurance sector

21 June 2022 - Financial Markets (Conduct of Institutions) Amendment Bill completed its Committee stage in Parliament, with the Third Reading still to come. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_93443/financial-markets-conduct-of-institutions-amendment-bill

21 June 2022 - Companies (Levies) Amendment Bill completed its First Reading in Parliament, with the Bill referred to the Commerce Select Committee. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_124080/companies-levies-amendment-bill


FMA’s 8-step action plan for applying for a FAP license, and other news

The FMA has published an eight-step action plan setting out the key steps needed to apply for a Class 1 or Class 2 FAP license. Applications need to be submitted prior to the target date of September 30 to be processed on time. The action plan takes you through deciding which license class to apply for, questions the FMA will be asking, how to assess your business against the questions, admin and login steps and how to get help. The check list has direct links to the related resources and tools you’ll need.

More daily news:

Finzo appoints Stacey Jacobsen as in-house compliance officer

FSC Conference 2022 early bird pricing closes 30 June

ANZIIF New Zealand Insurance Awards 2022 are open for submissions


Legal and regulatory review for the life and health insurance sector

20 June 2022 – FMA published its Auditor Regulation and Oversight Plan 2022-2025. https://www.fma.govt.nz/news-and-resources/reports-and-papers/auditor-regulation-and-oversight-plan

15 & 17 June 2022 – The Government Consumer Protection website posted information titled “Phishing makes up most scams reported to CERT NZ” and “Scammers using sophisticated attacks against New Zealanders”, with the latter reporting that New Zealand banks have joined forces with CERT NZ, Consumer Protection, and Te Tari Taiwhenua Department of Internal Affairs (DIA) to warn Kiwis of new threats from scammers.

https://www.consumerprotection.govt.nz/news-and-media/phishing-makes-up-most-scams-reported-to-cert-nz/

https://www.consumerprotection.govt.nz/news-and-media/scammers-using-sophisticated-attacks-against-new-zealanders/


Bernard Aw describes inflationary pressures on NZ, possible impact on businesses, and other news

Bernard Aw, economist for Asia-Pacific at Coface, has described intensifying inflationary pressures on NZ, warning that too strong an inflation rate has the potential to dampen economic activity.

The consumer price index hit 6.9% in the first quarter of 2022, the highest in over 30 years, lifted by double-digit growth rates in costs of housing and transport, as well as strong increases in household utilities and food. Core inflation rates quickened as well, due to demand pressures acting on limited resources, worsened by supply constraints.

The strong rise in consumer prices is expected to erode households’ purchasing power, and therefore constrain private consumption….. Consumers remained pessimistic about the economy in April after confidence fell to a record low in March, according to the ANZ-Roy Morgan Consumer Confidence index.

…..reduced profitability could push businesses to delay investment plans and cut back on output.

More daily news:

John Botica of FMA says there will be no rollback of the 15 March FAP licensing deadline - 'no license, no advice'

Financial Advice Code Committee has two new unnamed members

Diana Clement sets out five steps for financial wellbeing

World Continence Week starts today


Legal and regulatory update for the life and health insurance sector

The Financial Markets Conduct of Institutions Bill has a Special Order Paper added which has just been released and available here: https://legislation.govt.nz/sop/government/2022/0173/latest/096be8ed81c361f5.pdf. Of particular interest to Financial Advisers under the new regime will be the changes to definition of intermediary and exemptions that are intended to reduce the overlap between a product provider's fair conduct programme and the conduct obligations that Financial Advisers will have through their own licence.


Cigna responds to $180,000 FMA fine, and other news

The FMA has announced OnePath Life and Cigna Life will jointly pay $180,000 to the FMA after admitting liability for breaching the fair dealing provisions of the FMCA. While OnePath Life and Cigna Life did not directly make any misleading representations, their agent, ANZ was found to have. Tamsyn Parker writes in NZ Herald:

The breaches relate to misleading representations ANZ made when issuing monthly credit card statements to certain ANZ customers who held credit card-repayment insurance (CCRI) policies with Cigna and OnePath.

The bank was found to have charged customers for credit card-repayment insurance (CCRI) which offered no cover or benefit and issued duplicate policies between April 2014 and November 2019.

Cigna says impacted customers were contacted and issues put right in early 2020, before it offered an enforceable undertaking to the FMA re the discontinued CCRI proposition.

Cigna also records its commitment to developing and maintaining effective policies, systems, and processes to support good customer outcomes and to prevent issues of the kind referred to in these undertakings from occurring in the future.

More daily news:

AIA launches 'AIA MyCare' portal for advisers and corporate partners

Jo Mason of NZbrokers shares opinion on the challenges and opportunities in the insurance market

Zurich Australia and New Zealand announces new sustainability targets and initiatives

Kath Johnson leaves Fidelity Life for GM Channel Strategy & Delivery role at AA

ANZ appoints Amanda Owen Chief Financial Officer