Daily news update: FMA investigate advice regarding KiwiSaver , and more stories

The FMA is looking into an adviser that recommended clients move savings into more conservative accounts during Level 4 lockdown. The FMA has stated that this advice could cause great damage to clients. Clients that accepted the advice provided in a mass email would have locked in the losses caused by the market volatility. As a result of the adviser’s actions, the FMA has reminded the public that they should consider all options before making any changes.

"The AFA sent a bulk email in March 2020 to clients urgently recommending they move their savings in KiwiSaver and other funds to less risky options.

The FMA was alerted to the communication after receiving a complaint from one of the adviser’s clients.

FMA head of supervision James Greig said the advice was inappropriate and had the potential for significant harm.

"The FMA has a low tolerance for poor conduct that poses risk to customers as a result of the Covid-19 crisis, especially because New Zealanders are looking for financial guidance at this time.” Click here to read more

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Daily news update: RBNZ fear for insurers and non-bank lenders, and news stories

Adrian Orr has highlighted that the financial system is sound enough to overcome the economic impacts of COVID-19. Although banks have coped well with the pandemic, the Reserve Bank has stated that insurers and non-bank lenders are more vulnerable.

“The Reserve Bank said in the central bank's annual report on financial stability published on Wednesday that banks had coped well with the coronavirus pandemic so far.

But under "severe enough scenarios, the viability of banks would come into question", it warned.

In the event of its worst-case lockdown scenario "initial modelling suggests that, without significant and timely mitigating actions, banks would fall below minimum capital requirements under this scenario," it said.

The Reserve Bank has also cautioned that some other financial institutions that take deposits from the public, and some life insurers, are already more vulnerable.” Click here to read

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Daily news update: MAS weigh in on remote working, and other stories

In light of the past two months, Martin Stokes, MAS CEO, has said that the insurer is open to the idea of remote working. Stokes highlights the slow adoption of flexible work options in past years has been accelerated by the lockdown. MAS will use events during the lockdown to inform future working arrangements.

“Medical Assurance Society (MAS) chief executive Martin Stokes (pictured) says that the past six weeks have been a kind of mass social experiment, and, as a result, the workplace flexibility trends that were already emerging have been accelerated massively. He says the level of productivity in some areas has been surprisingly high in a remote environment, and, as a result, a much higher level of flexibility will become the norm.

“This situation has identified for us the opportunities that would otherwise likely have emerged over a much longer period of time,” Stokes told Insurance Business.

“Social trends would have influenced people’s thoughts around where they wanted to work, flexibility, different working arrangements, etc. But that’s really been concentrated into a six week-long social experiment where everybody’s had a taste of what that’s like enforced upon them.” Click here to read more

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Daily News Update: business debt hibernation, and more stories

Below is a press release from the FMA on business debt hibernation.

“Last week, the Government passed the COVID-19 Response (Further Management Measures) Legislation Act 2020, which introduced the business debt hibernation (BDH) scheme. Business debt hibernation may help eligible businesses affected by COVID-19 manage their existing debts until they can start trading normally again. For example, businesses may agree with creditors to delay repaying some of their debt.

BDH is available to a wide range of businesses (including companies, trusts and partnerships), some of which are regulated by the FMA. BDH does not extend to registered banks, licensed insurers, non-bank deposit takers, licensed derivatives issuers, operators of designated settlement systems or sole traders.

Conditions to enter and remain in BDH include director approval, notice to the relevant Registrar, and creditor agreement. These and other conditions that must be satisfied are set out in Schedule 13 of the Companies Act 1993.”

In other news:


DAILY NEWS: Global COVID-19 effects on insurance industry, and more stories

Lloyds of London has reported that COVID-19 will likely cost the global insurance industry over NZ$336 billion (US$200 billion). It is predicted that the industry will experience a greater loss if lockdowns around the world continue into the next quarter. 

“The pandemic will cost the insurance industry over US$200 billion (NZ$336 billion), according to Lloyds of London, who estimated that its own payouts are now on a par with the Sept. 11, 2001 attacks or the combined impact of hurricanes Harvey, Maria and Irma in 2017.

Lloyds, which as an insurance market pays out to insurers affected by disasters, said it expects to pay between $3 billion and $4.3 billion to insurance companies to help them cope with the COVID-19 pandemic.

Losses could widen if lockdowns continue into the next quarter, which would push the overall cost to the insurance industry to $203 billion. Unlike the storms, for example, the pandemic's impact is global, systemic and long term.” Click here to read more

 

While most of those impacts are for catastrophe cover, there will be impacts on life insurers, especially in those markets where control measures were less successful.

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Temporary commission boost from Cigna

It has been announced that Cigna plans to double the commission of advisers during June and July. This announcement comes after the Government stated that all New Zealanders need to have access to independent financial advice. The increase in commission payments will be made out in recognition of the efforts of advisers during Level 4 and Level 3.

"“Life insurer Cigna has announced that it will be doubling service commission payments to its insurance advisers for the months of June and July 2020.

Chief executive Gail Costa said the doubled payments are intended to recognise the effort insurance advisers have put into helping their clients over the past several months as the COVID-19 pandemic has unfolded, all while making adjustments to their own businesses.  She says the financial support should help them keep on top of any personal financial difficulty, and will help them carry on assisting their clients as they rebuild their lives.

The announcement was made following the Government’s statement that New Zealanders should continue to have easy access to independent financial advice." Click here to read more

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Client neglect result in increased complaints

With restrictions placed on movement, advisers were unable to visit clients. We can assume that clients would want to speak to their advisers at this time to discuss their options. We can also assume that this has been a busy time for advisers. As demand increased, some clients have felt that their needs have not been properly catered to. As a result, FSCL has reported an increase in complaints.

“FSCL chief executive Susan Taylor said her disputes service had noticed a few extra complaints about advisers since the Covid-19 outbreak hit.

Some clients were upset when they discovered that an income protection policy did not cover them for the loss of a job. Others had been disappointed when they found their business interruption cover would not cover them for being closed during the pandemic.”

In comparison,

At IFSO, there had been 14 complaint inquiries and one complaint about advisers since April 2, which a spokeswoman said was about the same level as normal.click here to read more

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How hard has it been to write new business during COVID-19?

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Cigna unveil product enhancements and new quoting software

Cigna has unveiled their new quoting software that allows advisers to generate quotes in real-time. Additionally, Cigna is looking to improve Assurance Extra, Business Assurance, Business Extra, and Agribusiness Extra product suites.

“Cigna New Zealand has rolled out a new online quote tool for its insurance advisers - the first in a series of planned improvements to help advisers work more efficiently.

CEO Gail Costa says the tool will allow advisers to obtain quotes in real time, giving them access to Cigna’s most up to date plans and pricing. It will also allow them to access both personal and business products at the same time.”

Gail Costa provided further insight about the software by stating that:

“This is a new kind of technology used for quotes, and it is an intuitive tool that uses all of the latest user experience ideas,” she explained.

“It also plugs into the medical database, and this makes it much easier for advisers to get accurate quotes for their clients, and also identify any other benefits they may need.”  Click here to read more

In other news:

Australia: ASIC cracks whip on three financial advisers

Suncorp: Suncorp reveals results and pandemic hit

Back to the office on Thursday (if you want)

Advisers complain about narrow rebate time limit

FMA: Cyber-resilience in FMA-regulated financial services


Partners Life determined to closely monitor adviser performance

Partners Life is now working to better understand the performance of advisers. The insurer is evaluating the performance of advisers at this time by surveying clients and marking the reported performance of advisers against a set matrix.

“Partners Life has begun collecting data from clients about how advisers are performing against its Customer Outcomes Matrix.

This forms part of its new commission structure. Advisers who are shown to be delivering superior service for their clients will receive more remuneration.

The matrix covers six indicators of adviser performance: Customer advice complaints; the initial advice process; replacement advice process; cancellation advice; non-disclosure and misstatements at claim time; and service activity.

Under new rules, insurers will have to be able to show that they have clear monitoring of the conduct of all those involved in the product distribution process, from manufacture to after-sale follow-up.” Click here to read more

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FSC and FMA joint webinar to discuss current environment

Gavin Quigan, Principal Adviser - Restricted Managed Investment Schemes, from the FMA will be joining forces with the FSC to offer insight into the regulatory relief the FMA is offering as well as discussing relevant issues being encountered during Level 4 and 3 and providing an outlook on what the coming months may hold. The webinar will be held via Zoom on Friday 8 May 10 am – 10.40 am Click here to register

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Information for people needing to complete oaths, affirmations or declarations during COVID-19