Southern Cross on working from home, and more daily news

Southern Cross has published the findings from the 2021 Southern Cross Health Insurance – BusinessNZ Workplace Wellness Survey. The survey respondents were from all over the country, with 14% of respondents based in Auckland, 13% based in Wellington, and 13% based in Canterbury. The survey has revealed since the COVID-19 pandemic began 34% of organisations surveyed reported that they are more open to the idea of employees working from home, even outside of strict lockdowns. The survey highlighted that 73% of organisations reported that employees felt isolated while working from home, and 66% of respondents reported that more employees experienced higher levels of general stress in 2020. Click here to read more

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FMA: Rob Evernett's new role revealed

Fidelity Life:

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Legal and regulatory update for the life and health insurance sector

12 Oct 2021 – The FMA released advice that the Ministry of Justice commenced a statutorily required review of the AML/CFT Act on 6 Oct 2021, with the MOJ releasing a consultation document with submissions closing on 3 Dec 2021. https://consultations.justice.govt.nz/policy/aml-cft-review/

12 Oct 2021 – IRD released a commentary on the Supplementary Order Paper No. 64 to the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill, containing proposals aimed at limiting the deductibility of interest incurred for residential property investments. https://taxpolicy.ird.govt.nz/publications/2021/2021-commentary-sop-argrm-bill

13 Oct 2021- FMA issued guidance on the advertising of financial products. https://www.fma.govt.nz/news-and-resources/media-releases/fma-issues-guidance-on-advertising-of-financial-products

13 Oct 2021 – RBNZ issued a consultation seeking views on its enforcement framework with submissions closing on 24 November 2021. https://www.rbnz.govt.nz/news/2021/10/views-sought-on-enforcement-framework

13 Oct 2021 - 13 Oct 2021 – MBIE advised that the Minister of Commerce and Consumer Affairs has issued the Updated Addendum to the Responsible Lending Code: COVID-19. The addendum elaborates on and offer guidance on how lender responsibility principles and lender responsibilities may be implemented by lenders while dealing with borrowers who have been impacted by COVID-19. https://www.mbie.govt.nz/dmsdocument/17505-updated-addendum-to-the-responsible-lending-code-covid-19

 

 


Legal and regulatory update for the life and health insurance industry

11 Oct 2021 – The FMA, while issuing a public censure of a derivatives issuer (FIRMA NZ), advised that it is in the process of conducting an in-depth monitoring review of the Derivatives Issuer industry, following a sector risk assessment last year. The results of the review will be collated for consideration of future industry guidance and/or standard condition review. While the review has been deferred due to COVID-19 Alert Level changes, the FMA expects to conclude the review before the end of 2021. https://www.fma.govt.nz/news-and-resources/media-releases/censures-firma-nz-breaches

11 Oct 2021 – Two Bills introduced into Parliament

  • Data and Statistics Bill - intended to repeal and replace the Statistics Act 1975

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_116197/data-and-statistics-bill

  • Retail Payment System Bill - introduces a range of measures to promote competition and economic efficiency in the retail payment system

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_116198/retail-payment-system-bill

11 Oct 2021 – Council of Financial Regulators noted the passing of its tenth birthday with recruitment of its first adviser, having its role recognised in legislation, and completing an updated Memorandum of Understanding between its members. https://www.cofr.govt.nz/news-and-publications/cofr-celebrates-significant-milestones.html


Legal and regulatory update for the life and health insurance industry

5 Oct 2021 – RBNZ issued advice of a change of the implementation date from 1 Jan 2022 to 1 Jan 2023 for the interim Solvency Standard applicable to insurers. Insurers will be particularly relieved at this decision, as there were some significant challenges with the 2022 date, and the modelled requirements for additional capital. https://www.rbnz.govt.nz/regulation-and-supervision/insurers/consultations-and-policy-development-for-insurers/active-policy-development/review-of-the-insurance-solvency-standards

5 Oct 2021 – FMA advised that MBIE has commenced a review of FMA funding and levies, with submissions closing on 7 November 2021.

https://www.fma.govt.nz/compliance/consultation/consultation-fma-funding-and-levy-review

https://www.mbie.govt.nz/about/news/consultation-opens-on-2021-fma-funding-and-levies-review/

6 Oct 2021 – Ministry of Justice launched a public survey seeking views on the impact of New Zealand’s anti-money laundering laws, with the survey closing on 3 Dec 2021. https://www.justice.govt.nz/about/news-and-media/news/what-do-you-think-of-our-anti-money-laundering-laws/


Legal and regulatory

27 Sept 2021 – Several regulatory releases related to financial services published as follows:

  • KiwiSaver (Reallocation and Transfer of Default Members) Regulations 2021
  • Financial Markets Conduct (Communal Facilities in Real Property Developments) Exemption Notice 2021
  • Financial Service Providers (End of Transitional Period) Order 2021 (relevant to overseas financial service providers with New Zealand retail clients above a minimum threshold)
  • Credit Contracts and Consumer Finance (Exemptions, Annual Returns, and Other Matters) Amendment Regulations 2021

4 Oct 2021 – NZ Police Financial Intelligence Unit released its August 2021 Suspicious Activity Report. https://www.police.govt.nz/sites/default/files/publications/fiu-monthly-report-aug2021.pdf

4 Oct 2021 – RBNZ released its Annual Report. https://www.rbnz.govt.nz/news/2021/10/maintaining-focus-on-economic-wellbeing-and-prosperity

4 Oct 2021 – FMA media release, as part of World Investor Week (4-10 October), urging DIY online investors to pause before succumbing to investment FOMO. https://www.fma.govt.nz/news-and-resources/media-releases/diy-investors-encouraged-to-take-a-mo-before-giving-in-to-fomo/


Asteron Life announce policy changes, and more daily news

Effective Monday, 27 September, Asteron announced a series of product enhancements to their personal range. Asteron Life has announced that changes have been made to expiry ages for Trauma Recovery Cover. The new expiry age for both standalone and accelerated benefits has increased from 75 to 85. Additionally, the expiry age for Continuous Trauma and Trauma Reinstatement benefit have increased to 75, and the maximum entry age for Asteron Life Trauma cover has increased to 70. Robyn Bartlett, Asteron Life Product Manager, has noted that the changes are a result of focusing on flexibility and usability for both advisers and customers. As part of the change, Astron Life has also:

  • Added premium holiday benefit and premium and cover suspension to business insurance policies 
  • Added a new lump sum specific injury benefit 
  • Made changes to its Major Trauma ratios 
  • Changed the definitions for seven conditions in its Trauma policies for new and existing customers back to 2004 
  • Updatied policy wordings for various benefits including grief support and financial planning 

“Asteron Life has announced changes to expiry ages for Trauma Recovery Cover, as part of a suite of product enhancements it has released this week. 

For its standalone and accelerated benefits, the expiry age is lifting from 70 to 85. Some other benefits including its Continuous Trauma and Trauma Reinstatement benefit will lift to age 75. 

Robyn Bartlett, Product Manager at Asteron Life, said that flexibility and usability have been the core values that have driven the range of enhancements the company is releasing. 

“We have heard from advisers that they value being able to give their customers choices when it comes to building a package of insurance cover to suit them,” say Bartlett.  

“Increasing the expiry ages of our Trauma recovery packages gives advisers and customers increased flexibility to put together insurance that will give them peace of mind in their unique circumstances.” 

The maximum entry age for Asteron Life Trauma cover will also be extended to age 70. 

Bartlett said that providing a valuable Trauma cover that would create great outcomes for customers was a big focus for the insurer. 

“Trauma cover is one of the most valuable products for our customers at claim time,” she says.  

“As well as updating the entry and expiry ages, we have also made changes to the definitions for some conditions, including the updated cerebral aneurysm definition being a direct result of compelling customer feedback.” 

In 2018, Asteron Life released its Continuous trauma benefit, which remains the only benefit of its kind in the market in New Zealand. Continuous Trauma is an optional benefit which gives customers Trauma cover that they can claim on up to three times for unrelated events, even immediately after they have made a claim.  

“With things like Continuous Trauma and our latest enhancements, we’re working to create a robust Trauma that will give customers peace of mind over the long term, and improve the ability of customers to make a claim when they need to.” 

The changes to the expiry age take effect this week, and existing Trauma policyholders’ expiry ages will be automatically extended. 

As well as changes to its Trauma product, Asteron Life has released a number of other product enhancements including: 

  • Adding premium holiday benefit and premium and cover suspension to business insurance policies 
  • Adding a new lump sum specific injury benefit 
  • Making changes to its Major Trauma ratios 
  • Changing the definitions for seven conditions in its Trauma policies for new and existing customers back to 2004 
  • Updating policy wordings for various benefits including grief support and financial planning 

These and a suite of other changes are live in Asteron Life’s system this week.” Click here to read more

We will keep our users on Quotemonster in the loop as to when these ratings will be made available on our quoting platform. 

Please feel free to send through any information or feedback to info@quotemonster.co.nz 

 

In other news:

Financial Advice: Katrina Skanks had a global meeting with Financial Planning Standards Board, to plan for the World Financial Planning Day

FSC: ReGenerations Reimagined will begin 19 October. All ticketholders will be given all access passes for the new schedule

AIA: adviser wellbeing research closes on 10 October

FMA: FMA appoints Karen Chang as Acting General Counsel


Legal and regulatory update for the life and health insurance sector

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

  • 12 Aug 2021 – Financial Markets Authority (Chair of the Financial Markets Authority)
  • 26 Aug 2021 – Financial Markets Authority (Mark Todd (Chair), Rob Everett (CE), Edwin Mitson (Government and Industry Relations))

https://www.beehive.govt.nz/sites/default/files/2021-09/Hon%20Dr%20David%20Clark%20Proactive%20Diary%20Release%20%20August%202021.pdf

28 Sept 2021 - Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill completed second reading in Parliament. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_109905/financial-sector-climate-related-disclosures-and-other

29 Sept 2021 - Digital Identity Services Trust Framework Bill introduced into Parliament, designed to establish a legal framework for the provision of secure and trusted digital identity services for individuals and organisations. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_116015/digital-identity-services-trust-framework-bill

29 Sept 2021 – FMA announced the appointment of its current Head of Enforcement, Karen Chang, as Acting General Counsel until the FMA’s new Chief Executive joins next year. https://www.fma.govt.nz/news-and-resources/media-releases/fma-appoints-karen-chang-as-acting-general-counsel/


nib announces Clearhead content series, and more daily news

nib has announced that Clearhead has launched a new content series in partnership with former All Black and Clearhead ambassador Nehe Milner-Skudder. The initiative is designed to support the wellbeing of most at-risk communities and in honour of Mental Health Awareness Week. Clearhead aim to open up a dialogue about mental wellbeing among Maori communities. Throughout the series, Milner-Skudder shares his mental health story and strategies that helped him in his journey. Milner-Skudder has noted that he is proud to be part of the initiative and hopes that his story helps more Māori to seek help when they need it.

“In honour of Mental Health Awareness Week (MHAW) and to better support the wellbeing of our most at-risk communities, Kiwi digital mental health company, Clearhead, has today released further resources to provide more tailored support for Māori, in partnership with nib foundation.

Alongside a suite of culturally appropriate upgrades across its website, Clearhead has launched a new content series with former All Black and Clearhead ambassador, Nehe Milner-Skudder (Ngāti Porou, Tapuika), with the hope of encouraging more open conversation about mental health across Māori communities.

The content series features Milner-Skudder sharing details of his own mental health journey, and the tips and strategies that helped him overcome his struggles – including the importance of reaching out to others for support.

Clearhead CEO, Dr Angela Lim says that while Māori populations are consistently over-represented in Kiwi suicide statistics and are twice as likely to experience mental health issues than non-Māori, most of the resources available in New Zealand are not designed to address these inequities.

“It’s important to note that the loss of indigenous culture and heritage can lead to challenges with identity, confidence, self-esteem, and a sense of belonging. We know from our own user data that Māori are 75% more likely to feel as though they don’t belong – and some of that comes down to not having adequate culturally responsive wellbeing support,” Dr Lim said.

“We wanted to help bridge that gap and respond to the feedback of our Māori users, who want to see content that looks and sounds like them to improve the chances of the material resonating,” she said. 

Clearhead ambassador, Nehe Milner-Skudder, says he’s proud to lend his support to the cause, and hopes that by sharing his story, more Kiwis (and in particular more Māori) will feel more comfortable to reach out when in need.

 “I used to see vulnerability as a weakness, but I’ve grown to understand that it leads to great strength. I think that’s a difficult mental obstacle to overcome, especially as a proud Māori male. What I hope people get from me sharing my story, is that you’re never alone in this battle and that there are resources and tools out there to help anyone who’s struggling,” he added.

The series of 20 videos sharing Milner-Skudder’s journey will be released via Clearhead’s Facebook Page during MHAW and will sit permanently on Clearhead’s website. Clearhead’s Māori-friendly website refresh is also live from today and now incorporates Kiwiana designs and includes a more holistic wellbeing journey, taking into consideration Māori models of care such as Manaakitanga – a principle that captures the idea of caring, supporting and uplifting others.

nib foundation Executive Officer, Amy Tribe, says “While mental illness doesn’t discriminate and can affect anyone, at any stage in their life, we know Māori are 30% more likely go on with these conditions undiagnosed compared to other ethnic groups*.

By funding the development of these resources through our foundation, we hope to help reduce some of the stigma around seeking support and promote Māori feeling more comfortable and empowered to seek help if and when it’s needed,” said Mrs Tribe.”

 

In other news

Financial Advice: The new draft Constitution

Financial Advice:  Financial Advice NZ 2021 Awards entries close 30th September

FMA: Momentum builds in KiwiSaver as scheme reaches $81 billion


Legal and regulatory review for the life and health insurance sector

28 Sept 2021 – FMA released its KiwiSaver Annual Report for the period ending 31 March 2021. https://www.fma.govt.nz/news-and-resources/media-releases/kiwisaver-reaches-81-billion/

28 Sept 2021 - The Government released the draft legislation outlining the details of the policy limiting the right to deduct interest costs on residential property investments.

https://www.beehive.govt.nz/release/details-interest-deductibility-rules-released

https://taxpolicy.ird.govt.nz/news/2021/2021-09-28-interest-limitation-proposals


FMA identify poor value product, and more daily news

The FMA released their findings on the value of credit card repayment insurance (CCRI). The FMA has concluded that CCRI is a poor value product for all customers. As a result of the findings, the FMA is now urging over 200,000 New Zealanders to evaluate if they still need this insurance. The conclusion was based on factors including that there is a limited level of underwriting completed and that customer’s medical and occupational circumstances aren’t assessed. Additionally, the FMA found:

  • Providers’ insufficiently checked customers’ suitability for CCRI, failed to take account of individual circumstances and relied on customers ‘self-assessment’ of their suitability
  • Providers had poor communications with CCRI customers
  • Consumer understanding of CCRI’s features and benefits was poor, with some not realising it was optional
  • Providers revealed a number of processes, systems and administrative failings, including incorrect premium charging
  • CCRI benefits reduced significantly when a consumer reached age 65, with many of the benefits - the policy definitions which can trigger a claim - no longer applicable, yet consumers premiums were not decreased to reflect this.

Click here to read more

“The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - is urging an estimated 200,000 New Zealanders who have credit card repayment insurance (CCRI) to check if they still need the product, after a review found it to be poor value.

CCRI is a form of insurance which covers some, or all, of a customer’s outstanding credit card repayments in certain circumstances, including in the event of a customer’s bankruptcy, redundancy, injury, illness or death.

The FMA review, published today, has confirmed that CCRI is a poor value product for customers.

This is based on several factors including the limited level of underwriting completed by providers when they issue a CCRI policy. The underwriting process involves an assessment and calculation of the amount of risk the insurer is taking on for the person buying insurance. With the CCRI product, providers do not assess a customer’s medical and occupational circumstances. These factors mean numerous exclusions and prescriptive conditions are applied when someone makes a claim on the policy, so customers may not receive the benefits they expect.

The FMA report also found providers treated CCRI as a low-touch product, with customers receiving little communication or engagement. Therefore, many customers did not make claims. Because claims are being declined due to numerous exclusions or customers simply not making claims, this has resulted in providers experiencing low claims loss ratios and accruing significant  profits. The amount paid out in claims to customers is low compared to the insurance premium collected by providers.

The loss ratio for CCRI was reported as low as 10%, meaning around 10c is paid in claims for every $1 received in premiums. This compares, on average, to loss ratios of 80% for health insurers and 47% for life insurers.

CCRI withdrawn but still earning $20 million

The Joint Reserve Bank of New Zealand and FMA report into conduct and culture of the life insurance industry highlighted concerns about CCRI in 2019 and since then insurers have stopped selling it to new customers. The FMA remained focused on this product given an estimated 200,000 New Zealanders still hold in-force policies, with insurers earning around $20 million in premiums annually.

“We found underwriters and distributors are not displaying sufficient levels of customer care in their suitability assessments and communications with customers,” the report said. Product suitability assessments are a critical part of customer care, where a customer’s personal circumstances should be checked to ensure the product meets their needs and financial position.

James Greig, FMA Director of Supervision, said: “New Zealanders should check if they have CCRI and ask themselves whether they still need it. We encourage customers to contact their provider to check if this product is still suitable for them. Some providers indicated their sales process for CCRI had involved customers ‘self-assessing’ whether the product was right for them, based on product terms and conditions, and disclosure documents. This is unacceptable.”

Mr Greig noted the Financial Markets (Conduct of Institutions) Amendment Bill before Parliament will introduce obligations and duties for insurers to put customers first. “Insurers need to focus on managing conduct risk to ensure customers’ interests are prioritised,” he said. “This is an essential requirement of the new legislation, so insurers need to invest in the systems and processes to meet these obligations and show they are putting customers’ first.”

The FMA found:

  • Providers’ insufficiently checked customers’ suitability for CCRI, failed to take account of individual circumstances and relied on customers ‘self-assessment’ of their suitability
  • Providers had poor communications with CCRI customers
  • Consumer understanding of CCRI’s features and benefits was poor, with some not realising it was optional
  • Providers revealed a number of processes, systems and administrative failings, including incorrect premium charging
  • CCRI benefits reduced significantly when a consumer reached age 65, with many of the benefits - the policy definitions which can trigger a claim - no longer applicable, yet consumers premiums were not decreased to reflect this.

Inquiries ongoing, remediation underway

The issues uncovered in this review are concerning and the FMA’s inquiries remain ongoing.

Some providers have remediated, or are remediating, customers affected by any of these issues. The FMA will continue to engage with providers to ensure this activity progresses and is prioritised.

The review was carried out to better understand the suitability of CCRI for consumers and followed the 2019 Life Insurer Conduct and Culture review, which found certain insurance products provided poor value.

Sixteen underwriters and distributors participated in the review, which involved gathering qualitative and quantitative data between October – December 2020. This included gross written premium, claims ratios, dates CCRI was offered, suitability of processes, product reviews and any known issues.

The FMA received 13 consolidated responses from underwriters and distributors, with some of them related entities or part of a parent organisation.”

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Next week is Mental Health Awareness Week

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