Legal and regulatory update for the life and health sector

24 Mar 2021 – Takeovers Panel released electronic forms for independent adviser applications.

25 Mar 2021 – FMA advised of the release of the International Forum of Independent Audit Regulators (IFIAR) ninth annual survey of Members’ inspection results for the 2020 year. IFIAR is a membership organisation of 54 independent audit regulators, including the Financial Markets Authority (FMA). https://www.fma.govt.nz/news-and-resources/media-releases/ifiar-releases-2020-survey-of-inspection-findings/

23 Mar 2021 – RBNZ released a further update on amended statistics release dates in table form as follows:

Survey

Reference period

Series

Original date

New publication date

NZ debt securities

Jan-21 and Feb-21

D30-D31, D35

16-Mar-21

25-Mar-21

Household balance sheet

Dec-20

C21-C22

5-Mar-21

30-Mar-21

Foreign exchange turnover ($m daily averages)

Jan-21 and Feb-21

B4

15-Feb-2021 and 12-Mar-2021

8-Apr-21

Bank Income Statement

Dec-20

S20-S21

2-Mar-21

14-Apr-21

Bank Financial Strength Dashboard

Dec-20

Key metrics

3-Mar-21

15-Apr-21

Liquidity

Feb-21

L1-L3

1-Apr-21

16-Apr-21

24 Mar 2021 – Parliament completed the third reading for the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Bill. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_98047/taxation-annual-rates-for-2020-21-feasibility-expenditure The Government also announced that it intends to remove interest deductions on residential properties (except for new builds), and will consult on the details of this measure. https://taxpolicy.ird.govt.nz/news/2021/2021-03-23-government-property-announcements


Partners Life announce new commission payment system, and more daily news

Partners Life has announced that they expect to implement a new commission payment system on 29 March. Although the payment system is set to be updated, commission processing and calculations will remain unchanged. The change will affect the format of commission statements. From 29 March, commission statements will be made up of a commission statement, a transaction list, and a buyer-created tax invoice and credit note if advisers are GST registered.

The first section of the statement will include summaries of all daily transactions. This will include credited and debited commission, applicable taxes, and amounts paid to bank accounts. The second section will focus on breaking down commission payments by policy number, client name, annual premium income, and commission type. The third section will highlight the policy number, client name, API of the policy, total commission paid, non-life portion of the commission paid and the GST added or deducted on non-life commission. GST registered advisers will have access to a buyer created tax invoice/credit note. Partners Life has said that it is more practical to calculate the GST on non-life commissions as they have access to the information required to perform the GST calculation.

“Partners Life is implementing a new commission payment system. We expect the new commission payment system to be live on 29 March 2021. Commission processing and calculations will remain the same, the only change you will notice is the improved format of our commission statements.

The new commission statements now contain three separate sections:

  • Commission statement
  • Transaction list
  • Buyer-created tax invoice/credit note (if you are GST registered)

The first section of your commission statement is a summary of all transactions for the day. This will clearly outline the total of each type of commission credited or debited, applicable taxes added or deducted, and total amount paid to your bank account.

In addition to the above, the commission run number will change. Instead of the commission run number increasing by one for every run, the new run number will be the date of the commission payment. For example, the commission run number for Monday 29 March 2021 will be 20210329 (e.g. YEAR/MONTH/DAY).

The second section of your commission statement is the transaction list. This will provide a breakdown for all commission payments by policy number, client name, annual premium income, the type of commission paid per policy and the amount.

The third section of your commission statement is a buyer-created tax invoice/credit note for GST purposes. The buyer created tax invoice/credit note will state the policy number, client name, API of the policy, total commission paid, non-life portion of the commission paid and the GST added/deducted on non-life commission. If you are GST registered, we will provide you with a buyer created tax invoice/credit note. We believe it is more practical for us to calculate the GST on non-life commissions as we have access to all the information required to perform the GST calculation. By receiving the buyer-created tax invoice/credit note, and continuing to sell our products, you agree not to issue a tax invoice for the commission earned and you also agree to inform us if your GST registration status changes.”

In other news

Fidelity Life: Adrian Riminton to be new Chief Risk Officer from 1 April 2021

FMA: James Greig to lead FMA monitoring of new regime


Legal and regulatory review for the life and health insurance sector

19 Mar 2021 – FMA media release advised that James Greig, FMA Director Supervision, will lead monitoring and supervision of financial advice. https://www.fma.govt.nz/news-and-resources/media-releases/james-greig-fma-director-supervision-to-lead-monitoring-and-supervision-of-financial-advice/

19 Mar 2021 – AML/CFT - Department of Internal Affairs release advising that, as of 15 March, Financial Service Providers (FSPs) registering or updating their annual report details on the FSPR are required to declare if they are captured under the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act) as a reporting entity and who they are supervised by. The type(s) of financial services registered for as an FSP, and what activities offered in the ordinary course of business will determine if an FSP is a reporting entity. https://www.dia.govt.nz/AML-CFT-New-FSPR-registration-and-reporting-requirement

 18 Mar 2021 – Select Committee submission closing date advised to be 30 Apr 2021 for the Commerce Amendment Bill that underwent first Parliamentary reading on 16 March. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_108304/commerce-amendment-bill


Cigna Live announced, and more daily news

Cigna has announced that Cigna Live, a live streamed adviser update, will be broadcasted on 8 April 2021. In the live stream Cigna will discuss how the recent technology and product enhancements are intended to help transform adviser advice journeys. Cigna Live will be hosted by Jehan Casinader, Broadcast Reporter of the Year 2020. Gail Costa, senior Cigna staff and other experts will join to discuss recent enhancements and Cigna’s commitment and global positioning. The live stream will be 8 April from 10am to 11am. Those that register go into the draw to win a $1,000 business development pack. Cigna has also announced that it is planning on launching a new initiative that has been described as a market-first. Click here to register

I’m excited to formally invite you to Cigna Live – our first ever live streamed Adviser update.

By tuning in on 8 April, you’ll learn more about how our latest technology and product enhancements will help to transform the advice journey for you and your customers and make it even easier to do business with Cigna.

We’re also excited to be launching a market-first initiative that we think will be a game-changer for the Adviser community.

Jehan Casinader, Broadcast Reporter of the Year 2020, will host the event and you’ll hear from myself and key subject matter experts from across the business, who will share more about the work we’ve been doing to improve your experience with Cigna.

Alongside my local team, Jason Sadler - Cigna’s Head of International Markets, will provide an update on the company’s global position and ongoing commitment to protecting New Zealanders in 2021 and beyond.

In other news

Financial Advice: How to link a Financial Adviser to a FAP on the Financial Service Providers Register webinar

Financial Advice: Economic Series webinar set run between 31 March and 21 April

FMA: FMA chief executive resigns


Legal and regulatory review for the life and health insurance sector

16 Mar 2021 - The Financial Markets Authority (FMA) Board announced that Chief Executive Rob Everett had resigned and would leave the organisation towards the end of the year. https://www.fma.govt.nz/news-and-resources/media-releases/fma-board-announces-chief-executive-will-leave-at-end-of-2021/

15 Mar 2021 - The Australian Prudential Regulation Authority (APRA) released a response letter for insurers on proposals to collect cyber insurance and management liability data in the National Claims and Policies Database. https://www.apra.gov.au/news-and-publications/apra-releases-draft-reporting-standards-for-data-collection-national-claims

11 Mar 2021 - The Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Amendment Notice 2021 (‘Amendment Notice’) was released on 11 March 2021 and is now in force. It amends Part 5 (Reporting Entities whose customers are licensed managing intermediaries) and Part 8 (Financial advisers arranging for relevant services to be provided for retirement schemes) of the Schedule to the Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Notice 2018 (‘Principal Notice’), with the changes largely arising under the new financial advice regime.


Fidelity Life announce customer research, and more daily news

Fidelity Life has announced that it will be conducting customer research on new products and potential service improvements through Qualtrics. The research is intended to understand what is working and what isn’t. Fidelity Life has revealed that new advisers have already been involved in the research. More advisers will be utilised in future research.

“We’ll shortly be kicking off some research with customers about new product ideas and service improvements with the aim of finding out what they like, so we can do more of it, and what they don’t like, so we can make improvements. Don’t worry, we won’t be bombarding them!

As valued distribution partners, we’re keen to involve you along the way. The insights will not only support how we shape our products to better meet the needs of the market but will also provide us with valuable data on their preferences when it comes to customer experience.

From time to time we’ll share a summary of the findings with you, and hope you’ll find them valuable in supporting your interactions with customers and improve their overall experience with Fidelity Life.

We’ve already experimented in engaging a few advisers in this research so we can enhance your experience and improve the way in which we work with you. We intend to do more of this in the future too, more on that to come.

We’re working with a trusted and established partner in this space and using their survey platform – Qualtrics. If you have any questions, please feel free to get in touch”

In other news

From Stuff: Waiting in Pain: People without money and insurance the ones who suffer - a particularly valuable piece updating us on the situation with waiting lists and the process before that, even to get properly diagnosed. A powerful argument for having a plan and having insurance. 

FMA: March 2021 – A new financial advice regime begins for New Zealand


Legal and regulatory review for the life and health insurance industry

15 Mar 2021 – The new financial advice licensing regime commenced today with the Code Committee, the Financial Markets Authority and the Minister of Commerce and Consumer Affairs each completing a related media release. Relevant weblinks follow:

https://financialadvicecode.govt.nz/2021/03/15/update-15-march-2021-code-takes-effect/

https://www.beehive.govt.nz/release/new-financial-advice-rules-will-put-consumers-first

https://www.fma.govt.nz/news-and-resources/media-releases/start-to-new-licensing-regime-for-financial-advice/

15 Mar 2021 – The latest FMA update advised of the recent release of an updated guide for property syndicate investors. https://www.fma.govt.nz/investors/ways-to-invest/property-syndicates


Cigna premiums to increase, and more daily news

Cigna has announced that from 15 April 2021 there will be changes to underlying premium rates on Life, Trauma and Disability covers across Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra. Changes to Life, Trauma and Disability cover are a response to feedback and market developments. The price changes represent the changes. The price changes will be applied for new customers but current customers will have the new rates applied on their next premium review date after 15 April 2021. Applications that are submitted  before 15 April 2021 and issued before 15 May 2021 will not be immediately affected by the price changes. All changes are listed below:

 

·     Life cover rates on Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra are increasing by 3% for yearly renewable, 5-year level and 10-year level premium structures.

·     Alongside this we’ve increased our large sum assured discounts for customers with over $500,000 of life cover.

·    Trauma cover on Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra are increasing by 3% for yearly renewable premium structures.

·    Accelerated Complete Disablement Cover on Assurance Extra, Business Assurance and Agribusiness Extra are increasing by 3% for yearly renewable premium structures.

·    Disability covers including Income Cover, Mortgage Repayment Cover and Premium Cover are increasing dependent on factors including age, gender, wait period and benefit period. The increase will generally vary between 1-10%, however in some cases customers will experience a decrease.

 

“We wanted to give you a heads up about upcoming increases to the underlying premium rates on our current Life, Trauma and Disability Cover pricing across Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra.

 

The new underlying rates will come into effect on 15 April 2021.

 

Over the past year in response to feedback, and in line with market developments, we’ve made a number of enhancements to our core Life, Trauma and Disability cover to make it easier for customers to access support when the unexpected happens.

 

These new competitive rates reflect the recent enhancements and will contribute to the long-term sustainability of our products while remaining good value for your customers.

 

For new customers: The refreshed rates come into effect on 15 April 2021 for all new policies.

 

For existing customers: The new rates will be applied to existing customers at their next premium review date from 15 April 2021. Customers will receive notification of their new premiums via the renewal letter which is sent prior to their premium review.

 

Any applications submitted before 15 April 2021 and issued before 15 May 2021 will be honoured at the old rates and will not be subject to the new rates until the first premium review.” Click here to read more 

In other news

FMA: the FMA has issued a public warning to Roger David Gannon of Gannon Insurance

Cigna: Simon Prentice to join Cigna as Business Partnership Manager based in lower South Island

Cigna: Sharon Duffell new Christchurch Senior Underwriter in the New Business & Underwriting Team

Cigna: Multi-Benefit Discount extended until 30 June 2021

 


Legal and regulatory review for the life and health insurance sector

10 Mar 2021 – FMA released a consultation on potentially using its exemption power to exempt restricted schemes from certain disclosure and reporting obligations under the Financial Markets Conduct Regulations 2014. Submissions close on 21 April 2021. The FMA consultation website also noted closure with decisions of earlier consultations on the “New Financial Advice Regime Exemptions” and the “Proposed class exemption for restricted schemes from certain disclosure and reporting obligations.” https://www.fma.govt.nz/compliance/consultation/

10 Mar 2021 – Commerce Commission issued a reminder that from 1 October 2021, lenders providing consumer credit and mobile traders selling on credit must be certified by the Commerce Commission or face penalties, unless they are licensed or registered by the Financial Markets Authority or Reserve Bank of New Zealand. https://comcom.govt.nz/news-and-media/media-releases/2021/lenders-and-mobile-traders-must-be-certified-to-operate-from-1-october

5 Mar 2021 – Commerce Commission is seeking feedback on draft guidance for directors and senior managers of consumer credit providers and mobile traders on how to comply with the due diligence duty coming into force from 1 Oct 2021. Submissions close on Friday 19 March 2021. https://comcom.govt.nz/news-and-media/media-releases/2021/commission-seeks-feedback-on-due-diligence-guidance

8 Mar 2021 – Commission for Financial Capability announced the launch of a new workplace course to help women become more confident with money to mark International Women’s Day on 8 March. https://cffc.govt.nz/news-and-media/news/money-skills-for-women-offered-in-new-workplace-course/

7 Mar 2021 – Investment News NZ reported that the Financial Markets Authority (FMA) advised that, as at last Friday, it had approved some 1,636 transitional licenses and 943 authorised bodies, up from 1,467 and 774 on February 9. https://investmentnews.co.nz/investment-news/licensing-splurge-adds-400-in-last-dash-for-fslaa/

8 Mar 2021 – Good Returns, reported on the penalty outcome of the Financial Advisers Disciplinary Committee for the adviser who failed to keep proper records, while also noting the FADC statement that, “There is no suggestion that the Respondent has improperly benefited at the expense of her clients, or that any client has been disadvantaged”. Good Returns then reported that the adviser has stated that she has now retired and that the advice practice will be wound up by 31 March 2021. https://www.goodreturns.co.nz/article/976518248/adviser-learns-her-fate-from-fadc.html


Partners Life announces increase to medical pricing, and more daily news

Partners Life has announced a 10% price increase to the Private Medical Cover and the Specialists and Tests option. The new rate will come into effect from 12 April 2021. From 29 March, advisers will be able to quote using the current or new rates on the Quote System. New rates will apply to new customers while the new rates will apply to existing customers on their next policy anniversaries on or after 12 April 2021. Exact changes in price will vary depending on age related premium changes, inflation adjustments, underlying premium rate and policy fee increases, benefit expiry premium reductions, and loyalty discount changes.

“In order to continue to offer top ranked products to you and your clients we have to regularly review our premium pricing structures. Product innovation is something we take extremely seriously and as such we spend considerable time in balancing a first-class product offering with a competitive pricing structure. The time has now come to apply a premium increase to Private Medical Cover and the Specialists and Tests option.

Having completed a routine review of emerging claims experience and considering medical inflation, we have determined that an underlying premium rate increase of 10% will take effect from 12 April 2021.

From 29 March the Quote System will allow you the option to either quote using the existing rates or the new rates (it will default to the new rates).

From 5 April the Quote System will automatically use the new rates.

These premium increases will take effect on next policy anniversaries on or after 12 April 2021. Clients will receive their anniversary letter which will advise them of the new premiums payable from their anniversary date.

The total change in premium payable from the previous year is calculated based on age related premium changes, inflation adjustments to benefits and therefore premiums, underlying premium rate and policy fee increases, benefit expiry premium reductions, and loyalty discount changes.”

In other news

Partners Life: February webinar about disclosure converted into a Partners Life Academy course with five short videos with knowledge assessments

Actuaries Institute Australia: Under the Spotlight – Ricky Au

FMA: Unlicensed advisers need a contingency plan: FMA

Fidelity Life: Fidelity Life - My Story - David & Cheri Flight with intro from Carl Drummond