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Legal and regulatory review for the life and health insurance sector

29 July 2021 – Privacy Commissioner release confirming that Covid-19 vaccination status is personal information and so falls under the protections laid out in the Privacy Act 2020. https://privacy.org.nz/blog/the-covid-19-vaccination-and-privacy-rights/

30 July 2021 – RBNZ released an Op-Ed from the Reserve Bank Assistant Governor, Simone Robbers, titled “Sustainable Business: Working together on a path to a climate-resilient future.” https://www.rbnz.govt.nz/news/2021/07/working-together-on-a-path-to-a-climate-resilient-future

28 July 2021 - Minister of Commerce and Consumer Affairs, Hon David Clark, June 2021 diary released with the following potential financial services sector related meetings noted:

  • 10 June 2021 – Financial Markets Authority (Mark Todd, Chair; Rob Everett, CE)
  • 22 June 2021 – Takeovers Panel (Andy Coupe, Chair; Andrew Hudson, Chief Executive)
  • 24 June 2021 – Retirement Commissioner (Jane Wrightson, Retirement Commissioner)
  • 30 June 2021 - Chartered Accountants Australia and New Zealand (Peter Vial, NZ Country Head; Charlotte Evett, Government Relations Lead)


29 July 2021 – FMA release advising that AIA admits false and misleading representations to customers in FMA fair-dealing proceedings. https://www.fma.govt.nz/news-and-resources/media-releases/aia-misleading-representations-to-customers

29 July 2021 – FMA released cyber resilience information sheet for financial advice providers. https://www.fma.govt.nz/news-and-resources/media-releases/fma-releases-cyber-resilience-info-sheet-for-financial-advice-providers/

29 July 2021 – RBNZ advised that it will be holding a webinar on the interim Solvency Standard for insurers at 10 a.m. on Thursday, 5 August 2021, via Microsoft Teams. https://www.rbnz.govt.nz/regulation-and-supervision/insurers

AIA self-reported breach details, and more daily news

After AIA reported their shortcomings to the FMA as part of their submission for the FMA/RBNZ conduct and culture review of life insurers, the FMA filed charges in the Auckland High Court claiming that three causes of action under the Fair Dealing provisions (Part 2) of the Financial Markets Conduct Act 2013 (the FMC Act) were breached. The FMA based their case on:

  • purported enhancement of policy benefits
  • charging premiums after the termination of a policy and treating policies as terminated when they should have remained in force, and,
  • incorrect inflation adjustments.

AIA has said that a Notice of Admission will be filed and has agreed to admit to the breaches. A penalty hearing before the High Court will be held where the FMA will ask that AIA should be ordered to pay $700,000 as penalty.

“Life insurer AIA has admitted making false and/or misleading representations to customers in proceedings brought by the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko.

The case was filed in the Auckland High Court and alleges three causes of action under the Fair Dealing provisions (Part 2) of the Financial Markets Conduct Act 2013 (the FMC Act).

AIA has agreed to admit all causes of action and will file a Notice of Admission of the breaches in the High Court.  The matter will proceed to a penalty hearing before the High Court where the FMA will seek declarations of contravention, and where the parties will submit that AIA should be ordered to pay a pecuniary penalty of $700,000.

The FMA case is based on three core breaches regarding incorrect and misleading communication to customers holding various life insurance and associated policies:

  • purported enhancement of policy benefits
  • charging premiums after the termination of a policy and treating policies as terminated when they should have remained in force, and,
  • incorrect inflation adjustments.
  1. Passback benefits:

AIA wrongly told certain customers they were entitled to passback benefits (cover enhancements to an existing policy), without clarifying that the benefits only applied to post-2003 policies. The information customers received in anniversary letters misrepresented the benefits, and in some cases misled them about their policies.

  1. Termination Dates issues:
  • Premiums beyond termination: AIA continued to charge premiums when customers had no cover. Letters were sent to certain customers with policies approaching the end of their duration, specifying when cover would cease, but the letters contained the incorrect date.
  • Cover Cessation: AIA wrongly ceased cover for certain customers while their policies remained in force, which resulted in some customers, whose claims had been accepted, being underpaid on those claims. Customers were informed by cover cessation letters.
  1. Inflation Adjustments: AIA applied incorrect inflation adjustments to premiums. Many AIA customers choose to have their sum-assured adjusted in line with inflation, with premiums increased accordingly. Policy anniversary letters were sent to customers where the inflation adjustment had been incorrectly applied, and, as a consequence, some customers were charged excess premiums.

AIA self-reported the breaches to the FMA, when asked to provide information as part of the joint FMA/Reserve Bank of New Zealand conduct and culture review of life insurers in 2018. AIA has told the FMA that remediation for affected customers has been completed, and the FMA will be seeking confirmation of this as part of the process.

In deciding to bring this action, the FMA took into account a number of factors, including AIA’s self-reporting, its remediation efforts, the nature of the alleged misconduct, and the number of affected customers.

The FMA considered the seriousness of the breaches, and the length of time it has taken to deal with impacted customers, warranted enforcement action. The FMA is determined to hold such misconduct to account and send a strong message of deterrence to the market. The FMA case only captures breaches that occurred from 1 April 2014 – when the FMC Act came into force – but some breaches occurred prior to this and continued after the Act came into effect.” Click here to read more

AIA have emphasises that they self-reported the issues and completed remediation: 

AIA NZ and the Financial Markets Authority (FMA) have reached an agreement with regards to issues that AIA NZ self-disclosed to the FMA in June 2018 at the commencement of the joint FMA/RBNZ Conduct and Culture Review.

“After conducting an internal review, we found a small number of instances where we may have fallen short of our own standards and commitment to being as transparent as possible with our customers.  Since self-disclosing these issues to the FMA, we have worked relentlessly to remediate these complex issues, whilst engaging and cooperating with the FMA throughout. We have also worked swiftly with the FMA to come to a resolution” says Nick Stanhope, AIA NZ CEO. 

“Our remediation process is complete and, if a customer was impacted by one of the issues, they have already heard from us directly and we have put the issue right.  As part of this remediation, we have also reviewed our systems and processes to ensure this does not happen again. We always strive to do the right thing by our customers and community, and this situation is no different,” concludes Stanhope.

In other news

RBNZ: Review of the Insurance Solvency Standards webinar to be held on 5 August at 10am

FMA: FMA pings adviser for unauthorised advice

From Stuff: Taranaki widow battled for almost a month to get funeral insurance payout after husband's tragic death

From Good returns: CoFI debate back on agenda

FYI: How to quote Severe Trauma on Quotemonster

There are three insurers that currently offer Severe Trauma in their Product Suite – AIA (Progressive Care), Asteron (Major Trauma) and Partners Life (Severe Trauma)

For further information on each please click on the product below:   

To quote this on Quotemonster, simply select Accelerated or Standalone Trauma and click the “Severe Trauma” box below the cover amount

Here are some options on how to quote:

1. You can split the amount between standard Trauma and Severe Trauma to generate a quote for all three insurers


2. As a work around to the above, you can add $1 into the Cover Amount for standard Trauma and the full amount for Severe Trauma

Only two insurers will generate a comparision in this case as Asteron requires a minimum sum insured of $5,000 for their standard Trauma


3. By splitting the cover amount, you can generate a quote that contains both AIAs' Critical Conditions Cover and Progressive Care

Progress and CC

This method allows us to compare a premium and rating for Severe Trauma on Quotemonster, however if you have any feedback, please feel free to send this through to info@quotemonster.co.nz

Fidelity Life flood relief package, and more daily news

Fidelity Life has announced the development of a relief package that offers farming customers suffering financial hardship the option to apply to have their premiums temporarily waived without affecting insurance protection.

“In light of the recent flooding that has devastated parts of the West Coast and the top of the South Island, we’ve developed a special relief package for existing Fidelity Life farming customers suffering from financial hardship as a result of the floods. If you’ve been affected by the floods, we’d like to help lighten the load and offer you a break from your insurance premiums, while you get things back up and running. It means you will be able to apply to have your premiums temporarily waived* without impacting your regular insurance protection.” Click here to find out more

In other news

17th Annual Financial Markets Law Conference held on 26 July 2021. Key themes included:

  • Market conduct and surveillance
  • Fintech
  • CoFI Amendment Bill
  • Sustainability and climate risk
  • Cryptocurrencies and digital assets
  • A new dawn of financial market regulations

From NZ Herald: Why are Kiwis so under-insured?

AA health Insurance: Kiwis: ‘Cheaper Health Insurance Please!’

Russell’s piece in Good returns: How overpaying claims leads to product innovation

RBNZ announce insurer Solvency Standard consultation

The Reserve Bank has announced that a consultation will be opened until 1 October 2021 for the interim standard that considers upcoming changes to accounting rules (IFRS 17). The feedback will be incorporated into the current solvency standards. Changes will be made effective at the beginning of 2022. The started is intended to assure policyholders that insurers will be financially capable of meeting promises. Geoff Bascand, RBNZ deputy governor and financial stability general manager, has said that RBNZ will work to understand the capital impact on insurers through further analysis via an industry consultation.

“The Reserve Bank of New Zealand (RBNZ) is asking for feedback saying the interim standard is needed to take account of upcoming changes to accounting rules (IFRS 17) and to incorporate feedback into its current solvency standards.

The Interim Solvency Standard consultation will be open for 10 weeks until October 1, 2021, will take effect from early 2022 and be in force for around three years.

The standard has been designed so policyholders can be comfortable that an insurance company has enough funds to meet its promises to policyholders, even if it fails, RBNZ deputy governor and financial stability general manager Geoff Bascand says.

“Through our review of the standard, we have modified some of the ways that we require insurers to calculate their capital needs. This is to ensure greater consistency and clarity in our requirements and to deal with new accounting standards for the insurance industry,” Bascand says.

“This will bring our method for capturing risks into line with international standards. We will undertake further analysis, in consultation with the industry, as we are keen to understand the capital impact on insurers. We strongly encourage them to engage with the consultation.” Click here to read more


In other news

From Insurance Business Mag: How long does it take to get a Level 5 certificate?

nib: Underwriting delays for nib special offer

Partners Life: Naomi Ballantyne will be addressing Women in Insurance Summit 2021 attendees with her “Leadership in the 21st century,” presentation

Asteron Life: Claire Sutton will be a featured speaker at the Women in Insurance Summit 2021

nib: Rob Hennin will be a featured speaker at the Women in Insurance Summit 2021

AIA: Brynlea Hunter-Morpeth will be a featured speaker at the Women in Insurance Summit 2021

Legal and regulatory update for the life and health insurance sector

26 July 2021 – In a webpage post, the FMA released the “Top five tips for becoming a fully licensed Financial Advice Provider.” https://www.fma.govt.nz/news-and-resources/fma-stories/top-five-tips-for-becoming-a-fully-licensed-financial-advice-provider/

26 July 2021 – RBNZ announced that, from today, it will publish new breakdowns for residential mortgage lending by loan-to-valuation (LVR) ratios in the C30 web table. https://www.rbnz.govt.nz/statistics/c30

26 July 2021 – RBNZ & FMA sought feedback on implementing new law, the Financial Market Infrastructure Act enacted in May 2021, to safeguard the ‘plumbing’ of the financial system, with feedback closing on 20 Sept 2021. https://www.rbnz.govt.nz/news/2021/07/reserve-bank-and-fma-consult-on-new-law-to-safeguard-the-plumbing-of-the-financial-system

26 July 2021 – IRD released a set of questions and answers to support the Government’s policy proposals on interest limitation for residential property investors. https://taxpolicy.ird.govt.nz/publications/2021/2021-other-interest-limitation-and-bright-line-rules-q-and-a

27 July 2021 – RBNZ released research looking at the distributional effects of monetary policy and the household cash flow effects of low interest rates in New Zealand. https://www.rbnz.govt.nz/news/2021/07/incomes-rise-for-mortgage-holders-as-interest-rates-fall

27 July 2021 – Financial Services Council released research looking at what New Zealanders think about KiwiSaver, the role it plays in their retirement preparedness, and where it needs to head in the future. https://www.fsc.org.nz/bulletin_display/x_blog_code/2153.html

Cigna announce Cigna Live, and more daily news

Cigna has announced that Cigna Live will be held in August. David Haak has noted that attendees will hear from the Cigna team as well as expert guests. Further details are expected to be announced in the coming week.

To kick things off, I’m thrilled to announce Cigna Live will be back in August. Not only will you hear the latest from myself and the Cigna Team, but we’ve lined up some expert external guests to share their insights into our industry and the wider New Zealand market. This is a not-to-be-missed event, so keep an eye out for your invite and further details next week.

In other news

Cigna: Shaping Change adviser survey

Cigna: Seven common misconceptions about funeral insurance

FSC: FSC 'Generation Rent' Research Launch

FSC: Outlook 2021/22 with Geoff Bascand in Wellington - 29 July

FSC: Get In Shape Webinar Series: Session 19


FSC announce Regenerations speakers, and more daily news

FSC has announced the Regenerations speakers. Speakers include politicians, regulators and journalists. The speakers are:

The Politicians

Hon Grant Robertson, Deputy Prime Minister and Minister for Finance

Hon Dr David Clark, Minister of Commerce and Consumer Affairs

Andrew Bayly, Member of New Zealand Parliament

Todd McClay, Member of New Zealand Parliament


The Regulators

Geoff Bascand, Deputy Governor and General Manager of Financial Stability - The Reserve Bank of New Zealand

Rob Everett, Chief Executive - Financial Markets Authority

Clare Bolingford, Director of Banking and Insurance - Financial Markets Authority

Paul Gregory, Director of Investment Management - Financial Markets Authority

Sharon Corbett, Manager Financial Markets – MBIE

Gillian Boyes, Manager Investor Capital - Financial Markets Authority

John Botica, Director of Market Engagement - Financial Markets Authority

Derek Grantham, Principal Consultant Market Engagement - Financial Markets Authority


The Journalists

Heather du Plessis-Allan, Host - Newstalk ZB

Madison Reidy, Reporter - Newshub Live

Corin Dann, Host of Morning Report - Radio New Zealand


In other news

Financial Advice: Financial Advice NZ 2021 Awards launched. There are five categories and up to 16 awards. They're open to all members of Financial Advice NZ. The categories are:

  • Service to the Profession Award
  • Outstanding Adviser Award
  • Rising Star Award
  • Outstanding Support Person Award
  • Community Service Award

Cigna: additional client benefits outside of normal insurance cover offered for free. Benefits include fitness or nutrition advice, counselling services, addiction services, and general advice.

Wellness advice: You can apply to receive specific nutritional or fitness advice from a registered practitioner.

Eligibility requirements: Medical referral is required

Mental health counselling: Counselling services including but not limited to:

  • Anxiety
  • Depression
  • Anger management
  • Grief counselling
  • Diagnosis of a serious illness or injury
  • Stress
  • Eating disorders
  • Sexual harassment
  • Assault
  • Domestic violence
  • Post accident (e.g. motor vehicle/motorbike)
  • Parents with children who have special needs
  • Children with special needs (e.g. ADHD, Autism, Cerebral Palsy)

Eligibility requirements: Linked to a life event or life events

Addiction assistance: You can get assistance for addiction to any of the following:

  • Drugs
  • Gambling
  • Alcohol
  • Smoking

Eligibility requirements:

  • Linked to a life event or events
  • Will be at Cigna’s discretion and may require evidence to substantiate claim

General assistance:

  • Legal advice - limited to a lawyer preparing or updating a Will
  • Career counselling
  • Financial advice - limited to budgeting advice and small business financial advice e.g. writing a business plan
  • Employment related - limited to CV, career advice and interview preparation

Eligibility requirements:

  • Linked to a life event or events
  • Will be at Cigna’s discretion and may require evidence to substantiate claim

Cigna: those wanting to join the Cigna Premium League (CPL) can create their teams and register to enter the league

FSC: Get In Shape Webinar Series: Session 18

FMA: Insurance conduct and culture: Fire and general insurers update

Quality Product Research – upcoming zoom demonstrations

Introduction to Quotemonster with Kelly on Thursday, 5 August 2021 11:30 AM-12:30 PM

Introduction to our new report features with Treena on Wednesday, 28 July 2021 11:00 AM-11:30 AM and Wednesday, 4 August 2021 11:00 AM-11:30 AM

*New* Quotemonster Deep Dive with Treena on Wednesday, 18 August 2021 11:00 AM-12:00 PM – recommended for experienced users only. In this session we will:

  • Discuss features that are rarely used
  • Take a glimpse into our Research Database
  • Discuss the importance of our methodology and the value-based approach

Advicemonster (SOA) Demonstration with Treena on Thursday, 29 July 2021 11:00 AM-12:00 PM

Please email us at info@quotemonster.co.nz with the session you wish to attend

Furthermore, here’s a short promo video we recently created highlighting the reasons why all advisers should be using Quotemonster