« April 2022 | Main | June 2022 »

Insurance & Financial Services Ombudsman (IFSO) looks forward to updates in legislation regarding 'non-disclosure', and other news

Insurance & Financial Services Ombudsman (IFSO) Karen Stevens is looking forward to the Insurance Contracts Bill. The bill aims to update and consolidate NZ’s existing insurance laws and make insurance contracts easier to understand and fairer to consumers.

“As long as they don’t deliberately try and mislead the insurer by giving them wrong information or withholding information they know about, then they should not be penalised. At the moment, the law [is that] it doesn’t matter whether or not you innocently failed to disclose.”

Under the law in place at present, forgetting is enough to be denied compensation…. “If they actively mislead the insurer, then the insurer can respond by avoiding the policy or declining the claim. But if they don’t actively mislead the insurer, then the insurer can’t take that very harsh action that they currently do now.”

According to the ombudsman, over the years they have seen a lot of policyholders who have not actively tried to misrepresent the situation but have suffered the consequences of non-disclosure…. “That means that they’re uninsurable. As well as being uninsured, they’re uninsurable.” …

“Some insurance contract terms will be deemed to be unfair going forward, and I think that’s going to cause a degree of consternation to insurers in terms of looking at policies carefully and working out how that’s going to impact on the current policy documentation.”

“… the government has said that to help consumers better understand what their policy covers basically, they want them to be presented and worded clearly. So, the government’s thinking about how to regulate in that sort of space to make sure that they are easier to understand.”

We asked Karen Stevens to give examples of possibly unfair contract terms. Of course, this is difficult to do as a category, because ‘unfair’ will be judged in the courts in ways which can only ever be specific to a contract and a specific person. Having said that, what emerges from our discussion and some of the case examples provided is that blanket exclusions, for example, for mental health conditions; or all pre-existing conditions; or blanket provisions allowing an insurer to revise terms and conditions (such as changing the definitions for trauma or health conditions that define the threshold for payment) have been successfully challenged overseas, like the example here. Following our review of these issue in our last quarterly life report this suggests that it will be sellers of short-form underwritten contract that will probably have the most challenges in managing the transition required by the new law.

More daily news:
Richard Klipin concerned some areas of regulatory reform are being rushed
RBNZ publishes review version of Insurance interim solvency standard
Radiation oncology services shows growing gap between recommended treatment and what can be delivered as a result of staff and machine shortages

Cyberthreats and other news

Insurance Business NZ’s latest webinar covered cyber threats. Katrina Shanks shares some key takeaways from the webinar, including the three essential steps to becoming more resilient are 1) understanding cyber threats, 2) identifying vulnerabilities and 3) planning your response.

...large and small companies alike are being targeted every day, with financial services being one of the go-to industries for cyber criminals.
The risk for small-to-medium businesses is one of complacency, and it can put client data security and financial advisers’ own business reputation at stake.

More daily news:

Blair Vernon takes on Chief Transformation Officer role at AMP NZ

InterSystem's report finds 87% of NZ/Australia banks experience frustrations in using data to drive decision-making

ANZIIF launches Making a Difference Awards, nominations close 24 June

Aon report shows catastrophe events result in aggregate insured loss of $322.5m in NZ for ‘21

Quality Product Research: Trauma – the addition of Cerebral Aneurysm

According to the NZ Medical Journal (2013), Intracranial aneurysms are present in 2-6% of our population. Small unruptured and mostly asymptomatic aneurysms are relatively commonly found on brain imaging studies performed for other reasons and early intervention is crucial.

Insurers have responded to customer feedback by incorporating either partial or full benefits into their Trauma product suite, so we are now looking to add Cerebral Aneurysm as a separate item in our database to reflect this.

The definitions offered by most providers are essentially the same. AIA does specify the type of evidence required but in practice, the specified evidence is what all providers would effectively require when assessing the claim. Furthermore, Asteron’s definition differs but is the only provider with a full benefit payment. This would be reflected in the amount score.

Before we publish a draft rating, we would be interested in getting your feedback on how these wordings are being applied to claims you may be aware of. Most importantly, we need to determine what the incidence rates are for Cerebral Aneurysm.   

If you're interested in being involved in this rating, have had a client with a claim, or are an expert in this field please email us on researcher@qpresearch.co.nz  

We look forward to your assistance and input with this rating exercise and thank you in advance for your participation and time.

Legal and regulatory update for the life and health insurance sector

24-26 May 2022 – APRA released Australian statistics on Life, health and general insurance and superannuation. https://www.apra.gov.au/

26 May 2022 – FMA published a record keeping information sheet for financial advice providers about how they can demonstrate compliance with record keeping obligations. https://www.fma.govt.nz/news-and-resources/media-releases/fma-releases-record-keeping-information-sheet-for-financial-advice-providers/

FMA publishes info sheet for FAPs about compliance with record keeping obligations, and other news

The Financial Markets Authority has published an information sheet for Financial Advice Providers about how they can demonstrate compliance with record keeping obligations.

Under the new financial advice regime Standard Condition 1 for both transitional FAP licences and full FAP licences states: “You must create in a timely manner and maintain adequate records in relation to your financial advice service.”

The information sheet provides an overview of the record keeping obligations and sets out areas for FAPs to consider when reviewing their record keeping practises. It also includes examples to illustrate how FAPs can demonstrate compliance with the requirements.

More daily news:

Good Returns: The new-client conveyor-belt is broken

Christian Hawkesby holding Post-Monetary Policy Statement Presentations 31 May and 1 June

Kiwibank updates branding and introducing new slogan

Fidelity Life launches ‘Mark It’, a marketing and communications resource, and other news

Fidelity Life has launched Mark It, a marketing and communications resource to help advisers better connect with customers - includes how-to-guides, communication templates and educational content.

Mark it will include how-to-guides and communication templates designed for a range of customer life cycle scenarios, as well as educational content about different types of life insurance for customers’ changing ages and stages.

All Mark it content is written in plain English. New tools and content will be added over time, with the aim of helping advisers provide useful, educational content for customers.

More daily news:
RBNZ raises OCR 2%
Terrance Coe believes delay of NZIIS commencement is sensible; ACC should use TPA's for optimal results
Opposition criticises Income Insurance Bill

Legal and regulatory update for the life and health insurance sector

23 May 2022 – The Council of Financial Regulators posted brief comment and links to the Environment Ministry releases on New Zealand’s first Emissions Reduction Plan and the consultation being undertaken on the Draft National Adaptation Plan, with the consultation closing on 3 June 2022. https://www.cofr.govt.nz/

24 May 2022 – RBNZ published its feedback to responses received on its Insurance (Prudential Supervision) Act (IPSA) 2010 Policyholder Security consultation. https://www.rbnz.govt.nz/news/2022/05/insurance-policyholder-protection-consultation-helps-shape-future-policy

24 May 2022 - As part of Privacy Week 2022, the Office of the Privacy Commissioner joined Charities Services on a webinar called ‘Privacy 101 for Charities’. https://privacy.org.nz/blog/privacy-101-for-charities-a-recap/

24 May 2022 – The FMA held a webinar presentation for the financial services industry on the steps intended to be followed by the FMA to develop Conduct of Financial Institutions (CoFI) Intermediated Distribution Guidance.

Insurance Industry says policyholder guarantee scheme unnecessary, and other news

David Hargreaves writes about how insurers are universally against development of a policyholder guarantee scheme on interest.co.nz. Most policyholders in focus group expressed some willingness to pay a little more for 'fully guaranteed insurance' so long as increased costs would not increase insurer profits.

The Reserve Bank has been pushed back fairly firmly by the insurance industry on suggestions of developing a policyholder guarantee scheme.

Last year the central bank said it was considering introducing a scheme to pay out claims in the event of an insurance company failing.

The concept would effectively insure policyholders against the risk of their insurer collapsing….

"They felt a scheme should be unnecessary if other regulatory settings were correct; would risk moral hazard; would increase costs for policyholders (in a market that already showed signs of underinsurance); and would be an inefficient way of providing protection," the RBNZ said in its submissions summary.

More daily news:

Cigna NZ launches 'new professionals option'

Reserve Bank's consultation on insurance legislation finds financial information insurers publish is broadly appropriate

2022 Budget raises annual operating funding of FMA

Allianz Global Insurance Report finds premiums jumped by 5.1% in 2021

QPR welcomes Omar!

Exciting news over at QPR! 

We have recently welcomed Omar Dayao who has filled the position of our new Research and Customer Service superstar. 

Omar has worked in various roles in the finance industry over the years and is a great addition to our diverse team. He will be working to help maintain our product comparison database as well as assisting with all your day-to-day queries.  

We are thrilled to have Omar join us and look forward to his growth and contribution to Quotemonster :)  

Government criticised for allocating funds to ACC to work on NZIIS before MBIE’s analysis of consultation on scheme released, and other news

Jenée Tibshraeny writes in NZ Herald of how the government has been critiqued for pushing through legislation to allow ACC to work towards operationalising the NZISS ahead of the Ministry of Business Innovation and Employment’s (MBIE) analysis of submissions made via the consultation process. MBIE has said a formal decision on whether the government will proceed with the scheme will be made in June or July.

MBIE's acting manager of income insurance policy, Francis van der Krogt, told NZ Herald around 2000 people or organisations either made full submissions or answered a shorter-form survey.

He said officials are analysing the feedback and preparing a summary for Ministers, which will be released "in due course".

Asked why the submissions weren't published before the legislation was passed and funding allocated via the Budget, van der Krogt noted the legislation is a "small and relatively technical piece of legislation" that enables ACC to do work it wouldn't otherwise be able to do under existing legislation.

"The work will help inform final decisions. Any substantive legislation to create a New Zealand Income Insurance scheme would go through a full Parliamentary process," van der Krogt said.

More daily news:
FSC debunks health insurance myths
Good Returns: Leanne Lazarus (former Westpac Life CEO) appointed CEO Heartland Bank
Government commits to providing ACC funding for preliminary work on systems and operational processes for NZIIS
WTW introduces new version of Radar pricing software