In MBIE's recent paper on conduct of financial institutions one option, which is included in the preferred options package, is to extend personal liability to senior managers of insurance companies.
Why is personal liability considered a useful tool?
Reasons are presented in MIBIE's paper (which you can download here, and review yourself), however, in summary, there are two concerns.
The first, given most time in the report is the concern that managers may suffer from incentives to take better care of the insurer's interests than the client's - especially, perhaps, at claim time.
The second, which is not in the report is, perhaps a legacy of some of the collapses in finance companies that occurred during the global financial crisis. Some directors claimed that they were not informed by senior managers.
In both cases you can imagine how a personal liability could tip the scales towards behaviour more in the interests of the consumer and society as a whole.
How would this work?
There are some significant challenges in applying such an option. It is present in the Financial Market Conducts Act, and has also been included in the Credit Contracts Legislation Amendment Bill. Combined with its presence in the preferred options package, you should assume it is more probable than merely possible. Both the FMCA and the CCLA Bill prohibit insurance of the penalties.
What are the downsides?
These provisions could apply to many people. They may either be unwilling to shoulder such responsibilities, or they may require additional compensation in order to do so. Both outcomes seem likely to add significant cost.
Any current subscriber to the Chatswood Quarterly Life and Health Sector review is welcome to my initial notes on reviewing both the conduct of financial institutions and insurance contract law papers.