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.
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