Legal and regulatory update for the life and health insurance sector

21 Oct 2020 – Department of Internal Affairs published a new webinar on the AML/CFT enhanced customer due diligence obligation on its website. https://www.dia.govt.nz/Enhanced-Customer-Due-Diligence-Webinar

22 Oct 2020 - Simone Robbers, RBNZ Assistant Governor & General Manager of Governance, Strategy and Corporate Relations, delivered a speech to the 16th Annual Financial Markets Law Conference titled “Working together to support economic recovery, strengthen resilience, and develop culture”. https://www.rbnz.govt.nz/news/2020/10/working-together-to-support-economic-recovery-strengthen-resilience-and-develop-culture

22 Oct 2020 – FMA released a consultation titled “Recognition of Australian adviser qualifications”, relevant to the upcoming financial advice provider regime, with submissions closing on 20 Nov 2020. https://www.fma.govt.nz/compliance/consultation/consultation-recognition-of-australian-adviser-qualifications/

20 Oct 2020 – MBIE published information on its website an update on COVID-19-related business relief measures, noting that some have been extended, while others are no longer available or are soon to expire. https://www.mbie.govt.nz/about/news/update-on-covid-19-related-business-relief-measures/

21 Oct 2020 - The first statement defining the purpose of New Zealand’s retirement income system was released by the Retirement Commissioner. https://cffc.govt.nz/news-and-media/news/purpose-of-nz-retirement-income-system-defined/


FSC Session: Professional Advice - Get In Shape: The Next Bite of the Apple, supported by Chatswood Consulting

Day 2 of the conference kicked off with the Professional Advice - Get In Shape: The Next Bite of the Apple session. This session was sponsored by Chatswood and saw Richard Kliplin lead the current and relevant regulatory discussion with Sharon Corbett, John Botica, Angus Dale-Jones, and Derek Grantham. During the session viewers had the opportunity to hear from MBIE, the FMA and the Code Working Group. The insightful session revealed key licencing stats and offered commentary on CoFI and FSLAA. The session allowed viewers the opportunity to ask the regulator questions. It was great to see many viewers utlising the ask a question feature on offer. Questions included:

·       When will the FMA release the requirements for a financial advice provider full licence, and the final standard conditions?

·       Will the FMA do anything to smooth full licence applications across the 2 year period or deal with the rush towards the end of the period?

·       What are the expectations around serving existing clients (pre-FSLAA), and how are these expectations reflected in the duties in the law or the CODE?

·       There are two places in the transitional licence application where the user experience is unintuitive. What are the FMA doing to ensure that the user experience in full licence applications is intuitive, and applicants won’t get stuck unnecessarily?

 

FSC day 2 Oct 14 3FSC day 2 Oct 14 3

 


FSC Session: Insurance - Accelerating the Customer Agenda. What Needs to be True?

The FSC Generations conference is well underway. Yesterday I attended numerous sessions but thought I would write up some key highlights from the session 'Insurance - Accelerating the Customer Agenda. What Needs to be True?'

The session was hosted by Mark Banicevich and had a star-studded panel including Gail Costa, Nick Stanhope, Don Allerston, Clare Bolingford, and Russell Hutchinson.

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The reason for the session was to discuss what needs to be done going forward to meet the customers needs when it comes to life insurance. Three areas in particular featured a lot throughout the session: Affordability, Complexity and Trust. Below are some key points discussed:

  • Personal risk insurance exists to support Kiwi families – that is why we are here. But too many New Zealanders have no or not enough insurance. Only 38% of respondents from recent research have life insurance.

  • Customers all have different needs, so they need to work with an adviser to meet those needs as it requires time and knowledge to understand life insurance. They need to understand differences in products across the market. 

  • Trust is also extremely important to customers. Technology has also become more important, due to lockdown. Digital experience is also very important, we need to adapt and evolve as an industry.

  • Advice builds trust and confidence. Customers need predictability, they want assurance insurers will deliver on their promise. They expect flexibility and customisation – that is where we should be moving to.

  • The advisers are not a growing number, we need to bring more advisers into the industry. They tend to operate to their own client base.

  • It would be useful to find out how many Pacific island and Maori advisers there are. Do we currently have enough to influence the market to different ethnicities?

  • As an industry we need to find new customers via platforms that suit them. We need to build more engagement – things customers are involved in they tend to remember well.

  • Clients’ income is dropping but premiums are increasing significantly. How do we address that CPI is increasing at 1.5% but premium percentage increases are now regularly up in the double digits. We need to be conservative with pricing, so we are around long term to be able to pay claims. Automation will help bring costs down. There is an assumption that life insurance is too expensive without people even looking into it, how can we change this? 

  • We need to get in early with educating on life insurance – teach kids at school, what are financial products? Help them raise discussions and make decisions.

  • COVID-19 has already made the industry different – some of the trends we need to take from it are technology, digital, or still face to face meetings. We should let me the consumer decide and we respond to their needs.

  • The FMA asks to just do the basics well. The processes are not always there to achieve customer satisfaction. Embed a culture that is more customer eccentric. There won’t be a dramatic shift from the FMA, what was set in the code and conduct review is it.

  • Conduct risk management needs to be elevated to the same level as financial risk management for the customers sake.

  • We need to demystify the products and get a clearer customer understanding. We should come together and create centralised terms across the industry to help with customer understanding and to build trust.

  • There are numerous giant companies like Amazon who have made a move into the insurance industry – are we saturating it?

  • The pace of change has to be more manageable. We need to be better at data and insights – we currently tend to live off older information. We need to keep pace with changing needs and demographics. It is a continuous journey, it is not a one quick fix.
  • The expectations of customers is increasing, people are more time poor. Convenience is a huge thing, but we also know the value of advice. In the future we may move to a more streamlined online advice.

  • We need to use tools to assess health and wellbeing and assist with advice on how to improve these such as smart watches and apps.

Overall, all the topics discussed throughout the session such as price, simplicity, engagement, wellness and technology were all customer focused so it will be interesting to see what the future holds - it looks hopeful.

 

 

 

 


Legal and regulatory update for the life and health insurance sector

13 Oct 2020 - Minister of Commerce and Consumer Affairs, the Honorable Kris Faafoi, diary for August 2020 released, with the following potential financial services sector related meetings noted:

  • 4 August 2020 - Meeting with Financial Services Federation (Simon Jensen, Lyn McMorran and Bethany Bray)
  • 10 August 2020 – Meeting with Business NZ (Kirk Hope)
  • 12 August 2020 – Phone call with NZ Bankers Assn (Miles Erwin)
  • 24 August 2020 - Meeting with Mastercard (Cassandra Smith, Ruth Riviere, Chris Siorokos)
  • 31 August 2020 - Meeting with FMA (Rob Everett and Sarah Vrede)

https://www.beehive.govt.nz/sites/default/files/2020-10/Hon%20Kris%20Faafoi%20-%20Proactive%20Diary%20Release%20-%20August%202020.pdf

 


Cigna looking to enhance adviser channel, and more daily news

Cigna New Zealand CEO Gail Costa recently said that the insurer would be focused on developing its adviser channel. With approximately 30% of business coming in via advisers, Cigna is looking to enhance its network and relationship with advisers. These changes come as a result of Cigna’s acquisition of OnePath and Cigna’s identification of the important role advisers play during this time.

“Cigna New Zealand recently appointed a new general manager of distribution, and CEO Gail Costa says the company’s focus will be on growing its independent adviser channel over the coming months.

Costa says the adviser channel saw significant under-investment from OnePath Life, which Cigna acquired back in January of this year. She says Cigna is now looking to grow its network and relationships with advisers, especially given the increased importance of financial advice to customers hit by the recession.

“Roughly 30% of our business currently comes from independent advisers,” Costa commented.”

Although Cigna is looking to develop all channels, the immediate focus is on the adviser channel as Cigna believes that New Zealanders need independent professional advice.

“We want to grow all our channels, but we see the real opportunity in the adviser channel as it’s the dominant one in the market. We really do believe that people need good, independent advice in terms of insurance - that’s why we’re going to be prioritising that particular arm.” Click here to read more

In other news

It's time to talk about mental well-being in insurance

Hunters v gathers in the new world

FMA: FMA tells online investors to do their homework

FSC: Money & You part 3 survey closes next week


AIA introduces claims management service, and more daily news

AIA has announced the launch of AIA 360, a free claims management service that is on offer to eligible IP customers. AIA currently spends over $1.1 million annually to assist customers on disability claims and has 26 case managers assigned to 1,300 cases.  This averages to 45 cases for each case manager. Chief Customer Officer Sharon Botica has said AIA is able to improve processes and offer better support with AIA 360.

“The insurer is launching AIA 360, which is described as "a personalised end-to-end claims experience providing support, guidance and rehabilitation."

The programme will be available to eligible income protection claimants and is offered free of charge.

Currently the company spends more than $1.1 million a year helping people on disability claims. It has 26 case managers looking after 1,300 rehabilitation cases.  This is about 45 cases for each case manager.

"We keep these numbers low so we’re able to provide a good level of individualised and tailored care and support to each customer," AIA chief customer officer Sharon Botica says.

She says the programme will provide support and guidance throughout the claims journey.”

Advisers will be able to offer customers support during the digital claim process. Although the service is currently being offered to those making IP claims, AIA is looking to expand the service offering in the future.

“Botica says will the company is trying to digitalise many of its processes, DI claims management requires the personal human-to-human touch.

"People are in a very vulnerable position when they claim," she says.

Botica says advisers will be able to give clients comfort that if they have to make a DI claim, there is a full service to support them.

360 Care will give clients confidence at claim time, she says.

360 Care is an evolving claims experience that will be available to more claimants in the future.” Click here to read more

In other news

Cigna: David Haak appointed as new General Manager – Distribution

Professional IQ: Advisers find “unexpected benefits” from completing Level 5

Strategi: AML compliance update webinar

FMA: World Investor Week live Q&A webinar

FSC: Financial Services Council  Annual General Meeting 2020

Partners Life: transparency, trust & the right thing to do webinar


Fidelity Life set to halt upfront commission on CPI increases, and more daily news

Fidelity Life has announced that it will no longer offer advisers upfront commission on premium increases resulting from inflation rates. Fidelity Life is currently the only insurer offering this type of upfront commission. Acting CEO Adrian Riminton said that this change will be implemented in six months.

“"We've concluded that paying initial commission on CPI increases is out of step with changing expectations around good customers outcomes and we're the only insurer that pays it."

The change would take effect in six months' time.

If a clients' premiums were $1,000 and increased to $1,030 because of inflation, most insurers would pay renewal commission on the total new amount.”

Adrian Riminton continued by acknowledging that this change may cause issues for some advisers but said that the early notice is intended to allow for adjustments. Riminton announced that Fidelity Life will stop be paying upfront commission on CPI increases on former Tower policies that weren’t eligible for payment from next month. Fidelity Life  is set to announce more changes in the near future.

“"We acknowledge this change may have a financial impact on some advisers. That's why we are providing six months' notice to allow you as much time to adjust as possible."

Riminton said the insurer had also found that, since 2015, it had been paying initial commission on CPI increases for some former Tower policies that were not eligible for the payment.

"While we won't be looking to recoup this, we do need to correct our mistake. So from November 2020, we'll no longer pay you initial commission on CPI increases on these policies."

He said Fidelity Life would reveal more changes to its adviser proposition in the coming months.” Click here to read more

In other news

FMA KiwiSaver report: Contributions, fund-switching and fees

RBNZ: Reserve Bank relaunches Insurance Act review

nib: top five claims in August:


Amount

Details

 

1

$98,810

Spine Surgery

2

$78,780

Coronary Bypass Surgery

3

$77,530

Spine Surgery

4

$72,860

Aortic Valve Replacement

5

$72,850

Coronary Bypass Surgery


Legal and regulatory review for the life and health insurance sector

1 Oct 2020 – RBNZ released its 2019-2020 Annual Report. https://www.rbnz.govt.nz/about-us/annual-reports/2020-annual-report

1 Oct 2020 – FMA released its 2020 KiwiSaver report. https://www.fma.govt.nz/assets/Reports/Kiwisaver-Annual-Report-2020.pdf

2 Oct 2020 – NZX announced changes to the NZX Listing Rules relating to the disclosure requirements for Profile documents for direct listings. https://www.nzx.com/announcements/360828

1 Oct 2020 – RBNZ announced it is relaunching the review of the Insurance (Prudential Supervision) Act (IPSA) and commencing a review of the associated Insurer Solvency Standards. A paper has been released setting out the timeline for the Solvency Standards review project as well as the principles intended to guide the review and feedback is welcomed on this from interested parties. A second, substantive consultation paper outlining the RBNZ response to IFRS 17 and the structure of solvency standards is expected to be issued in December 2020. https://www.rbnz.govt.nz/news/2020/10/reserve-bank-relaunches-insurance-act-review

1 Oct 2020 – NZ Bankers Association launched guidelines to help banks serve customer needs outlining how banks will:

  • Treat their customers fairly
  • Recognise and prioritise customer interests
  • Give customers clear, concise and effective information
  • Design and provide products that meet customer needs
  • Provide good customer care
  • Identify, fix and learn from their mistakes

Link to NZBA release on Scoop news at https://www.scoop.co.nz/stories/BU2010/S00010/guidelines-to-help-banks-serve-customer-needs-launched.htm


FSC Generations: Professional Advice - Get In Shape: The Next Bite of the Apple, supported by Chatswood Consulting

Chatswood Consulting is pleased to support the FSC's Generations conference and the professional advice session in particular. In a time of great transition, why not meet with the decision makers of the regulatory change?

This year’s panelists

  • Sharon Corbett, Manager Financial Markets, MBIE

Sharon manages the financial markets policy team at MBIE. She has been leading the Ministry's team amending New Zealand's financial advice legislation since the review commenced in 2014

  • John Botica, Director of Market Engagement, FMA

John Botica is the Director of Market Engagement at Financial Markets Authority. John is an experienced senior executive, director and consultant in the financial services industry. He was co-founder of the Assure NZ Group, Managing Director at Guardian Trust and General Manager Wealth Management at AXA

  • Angus Dale-Jones, Chair, Code Working Group

Angus is the Chair of the Code Working Group and is a chartered accountant and former financial services regulator in Australia and NZ. Angus runs a conduct, compliance and regulatory strategy consultancy

  • Derek Grantham, Principal Consultant, FMA

Derek works directly with the Director of Market Engagement, and has successfully represented the FMA at numerous industry events, often as a speaker or panelist. This has helped build effective relationships between the regulator and market participants and presented the FMA as a modern and approachable regulator. He is passionate about engaging with the financial sector to ensure that New Zealand financial markets remain transparent and fair.

Why you would attend

In this time of change, some may feel overwhelmed, some may be looking for further insight and guidance while others may want reassurance that they have made the best possible choice for their adviser business.

The FMA recently reported that over seven thousand advisers are associated with transitional licenses and that two thousand advisers are yet to apply.  Hear directly from Director of Market Engagement, John Botica and Principal Consultant Derek Grantham from the FMA on all that you need to know about transitional licenses. Sharon Corbett, Manager Financial Markets at MBIE and Angus Dale-Jones, Code Working Group Chair, will be part of the panel to share their insights.

The line-up of panelists provides any advice professional the opportunity to gain a better understanding of different aspects relating to transitional licenses.

Benefits of attending

  1. Hear directly from the regulator
  2. Independent industry expert insights
  3. Your licensing questions answered

How to attend

Find out more about the programme and how to register at this link.

Learn more about structuring your adviser business for the new regime

If you want an unbiased view on the right next steps from a structuring point of view, do contact us, we are happy to engage with your preferred compliance consultants to bring an industry and environmental context to your decision, or recommend either of our preferred consultants to help you make that choice.