Legal and regulatory update for the life and health insurance sector

30 Nov 2020 - Reserve Bank invited feedback on scope of the Insurance Prudential Supervision Act (IPSA) 2010 and associated Insurer Solvency Standards, releasing two consultation papers, with submissions closing on both papers on 18 Feb 2021. The Reserve Bank will be hosting a webinar to discuss the consultations on Monday 14 December. To express your interest in participating, email rbnz-info@rbnz.govt.nz Link to the announcement at https://www.rbnz.govt.nz/news/2020/11/reserve-bank-invites-feedback-on-scope-of-insurance-act-and-structure-of-solvency-standards

26 Nov 2020 - Health Funds Association of New Zealand (HFANZ) and the Financial Services Council (FSC) today announced a merger into one single organisation under the Financial Services Council banner from 1 December 2020, creating a membership association of close to 90 organisations. https://www.fsc.org.nz/site/fsc1/201126%20Health%20Funds%20Association%20of%20NZ%20to%20merge%20with%20the%20Financial%20Services%20Council.pdf

26 Nov 2020 – IRD tax policy website included information and a link to the Minister of Revenue’s speech to CAANZ on 19 Nov 2020, outlining the Government’s tax priorities in the short term. https://www.beehive.govt.nz/speech/keynote-address-chartered-accountants-australia-and-new-zealand-conference

27 Nov 2020 - NZX confirmed plans to create an Information Technology (IT) working group that will include leading representatives from across the capital markets’ technology ecosystem. https://www.nzx.com/announcements/364053

27 Nov 2020 – Privacy Commission website included a new post on transitioning from Privacy Act 1993 to Privacy Act 2020. https://www.privacy.org.nz/blog/transitioning-from-the-privacy-act-1993-to-the-privacy-act-2020/


Industry associations merge

The Health Funds Association of NZ will merge with the Financial Services Council from 1 December. Congratulations to the FSC and HFANZ on concluding the merger. In an increasingly complex environment, driven by regulatory change, technology, and consumer choice, it makes sense to have a single, stronger, industry advocate capable to looking across the wide range of issues in common facing the sector. 

From the media release: 

Health Funds Association of New Zealand (HFANZ) and the Financial Services Council (FSC)
today announced a merger into one single organisation under the Financial Services Council
banner from 1 December 2020, creating a membership association of close to 90
organisations.

In a major milestone for the sector, the merger brings together Health Insurance with the
Life Insurance, KiwiSaver, and Investment industries and will place a focus on achieving
good customer outcomes, ensuring sustainability of the sector, and lifting standards and
professionalism from a single, stronger voice.

Rob Flannagan, Chair of the Financial Services Council said, “The merger is a great
opportunity to bring the health and life insurance industry together under one roof and
focus the efforts of our joint members on the important issues of the day, and most
importantly of all, driving better consumer outcomes.”

Len Elikhis, Chair of HFANZ, said “The Health Funds Association of NZ members represent
80% of the health insurance sector and has a rich heritage of over 30 years.

“The private health insurance sector supports 1.4m New Zealanders to meet their health
care costs. We believe that a well-balanced and integrated health system is key to achieving
great patient outcomes.

“I would like to take this opportunity to thank our members for their significant contribution
and we look forward to playing an active part within the Financial Services Council,”
concluded Elikhis.

Richard Klipin, CEO of the Financial Services Council said, “Coming together to build a
stronger association is exciting and important for protecting the health of Kiwis.

“With a bigger, stronger and larger organisation of around 90 members, this merger will
focus our work in the sector and create a stronger voice that will help shape the future
financial wellbeing of Kiwis,” concluded Klipin.


Legal and regulatory update for the life and health insurance sector

12 Nov 2020 – IRD advised that the Government has announced some changes to the Small Business Cashflow (Loan) Scheme, including extending applications for the loan, which can now be made until 31 December 2023, an extension of 3 years. https://www.ird.govt.nz/updates/news-folder/covid-19-small-business-cashflow-loan-changes

13 Nov 2020 – FMA released its Audit Quality Monitoring Report for 2020. https://www.fma.govt.nz/news-and-resources/media-releases/monitoring-shows-improvement-audits/

15 Nov 2020 – The Government announced the completion of signature of the Regional Comprehensive Economic Partnership Agreement. https://www.beehive.govt.nz/release/new-zealand-signs-regional-comprehensive-economic-partnership

16 Nov 2020 – RBNZ announced the introduction of new series and amendments to its weekly publication of Bank Customer Lending (BCL) metrics.

17 Nov 2020 – FSC advised that the RBNZ will be holding a webinar on Monday 14 December from 10:00-11:30am on insurance in relation to IFRS17 and Solvency.


FSC release new disclosure guide, and more daily news

The FSC has published a new disclosure guide. The guide is designed to help advisers meet obligations and provides information on what to disclose and what is not necessary to disclose. The FSC has focused on life insurance, investment, mortgage advice. The document examines the different disclosure requirements by using Kowhai Advice and Pohutukawa Advice as examples. The guide provides information on:

  • general requirements
  • publicly available information
  • when the nature and scope of the advice is known
  • when making a recommendation
  • when a complaint is received

Read the FSC Disclosure Guidelines

in other news

FMA: FMA acknowledges "difficult and stressful" year for advisers

Advisers ‘best placed’ to help clients understand life insurance


FINSIA networking breakfast with Geoff Bascand, and more daily news

The Financial Services Institute of Australasia (FINSIA) is set to host a breakfast networking session and a review of the latest Financial Stability Report. Geoff Bascand, RBNZ Deputy Governor, will be in attendance. During the session Bascand will discuss the current state of the economy and RBNZ projections as well as answering questions stated below. The event will be held on 27 November 2020 with a 7.15am start. The event will take place at EY Building, 2 Takutai Square, Britomart, Auckland 1010. Click here to register

“FINSIA is pleased to welcome our members back to face to face events with a complimentary networking breakfast followed by an update on the latest Financial Stability Report.

The Deputy Governor of the Reserve Bank of New Zealand, Geoff Bascand will provide a picture of the New Zealand economy, how it is performing and where the RBNZ thinks it is heading next.

The Deputy Governor will answer these questions and more:

  • The effect of the wage subsidy and mortgage deferrals on the economy – where are we really at?
  • Rising pressures in the housing market in terms of lending and borrowing behaviour – will the Central Bank bring back LVRs?
  • What happens to the economy if we are living in a world of negative interest rates?” Click here to find out more

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FSC: Launch of Money & You 3 and 2020 A Year In Review

FSC: FSC Connect: Data - Creating Industry Insight

FSCL: New board member announced at FSCL

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Insurers set to pay assisted dying claims, and more daily news

Various insurers have confirmed that terminally ill customers who choose to undergo assisted dying will be eligible for claim payouts. Before the referendum AIA was the only insurer to state that it would pay if the referendum passed. Recently, Cigna has said that it would pay out if assisted dying became legal and customers decided to end their life. Jane Barron, Pinnacle Life spokeswoman, noted that customers with a terminal illness are entitled to claim if it has been stated by a doctor that they have 12 months or less to live; so those that would have an assisted death are already entitled to claim.

“AIA, New Zealand’s largest life insurance company, said it could still settle claims if ACT MP David Seymour’s End of Life Choice Act became law, but others were yet to settle on their stance at that time.

 

With preliminary figures from the Electoral Commission on Friday showing 65 per cent of New Zealanders voting in favour of the End of Life Choice Act, terminally ill adults with fewer than six months to live will be able to request assisted dying.

 

One of the life insurance companies contacted by Stuff this week, Cigna, said it would pay out if assisted dying became legal and policy holders took up the option of dying with assistance. Cigna chief executive Gail Costa said the End of Life Choice Act stated that a person who died as a result of assisted dying would be taken to have died as if assisted dying had not been provided, or have died from the terminal illness from which they suffered.

 

“Provided a policy holder who takes up the option of dying with assistance meets all terms and conditions, they will be entitled to claim.”

 

And Pinnacle Life spokeswoman Jane Barron said people with a terminal illness were entitled to claim on their Pinnacle life insurance policy if their doctor said they had 12 months or less to live.

 

“Therefore, anyone who is in the situation where they are considering an assisted death is already in a position to be able to make a claim.”” Click here to read more

Chatswood thinks it likely that all the providers of the best life cover will include payment on this basis, as they already make advance payments for terminal illness, which is decided on terms that probably include more cases that those envisaged by the End of Life Choice Act, based on modelling shared in our recent Quarterly Life and Health Sector review. 

 

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FSC: FSC Enjoys A Solid Year Of Growth Despite Challenges

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Fidelity Life discuss up front commission changes, and more daily news

Fidelity Life chairman Brian Blake noted that the Government missed an opportunity to reduce life insurance policy commissions through CoFI. In a market that is highly competitive, Blake says that a voluntary reduction in upfront commission is unlikely, although Blake said that Fidelity Life is confident that it has adopted changes that meet guidelines. Fidelity Life is set to launch an online adviser product accreditation programme and an adviser quality assurance programme. Similarly, it has developed good customer outcomes principles to ensure compliance.

“Fidelity Life chairman Brian Blake says the government has missed an opportunity to force down commissions on life insurance policies.

Blake says: "The failure to address high upfront commissions in the Financial Markets (Conduct of Institutions) Amendment Bill was a missed opportunity in our view.

"In a highly competitive market like ours, without regulatory intervention it’s unlikely anyone will significantly reduce upfront commission levels and risk losing market share," he says in the company's annual report

He says Fidelity Life is confident it has adopted conduct and culture changes which meet the requirements of the Financial Markets Authority/Reserve Bank of New Zealand conduct and culture review.

The company will shortly be introducing an online adviser product accreditation programme, an adviser quality assurance programme and it has also developed good customer outcomes principles to help ensure Fidelity continues to meet the needs of its customers.

Further enhancements to its adviser proposition will be announced from early 2021, including some digital initiatives resulting from its Project Watson IT development.”

Although total comprehensive income and commission payments decreased, Fidelity Life experienced premium revenue increased. Fidelity Life has noted that it is looking to comply with RBNZ’s guidelines on prioritising capital protection. To comply, Fidelity Life would not be paying dividends this year.

“In the year to June 30, total comprehensive income fell from $20.7 million to $17.9 million. However, profit rose from $11.6 million to $17.0 million.

Insurance premium revenue increased from $275.47 million to $269.49 million and claims paid out rose from $125.7 million to $139.7 million.

However, commission payments fell from $57.37 million to $53.42 million.

The company’s earnings per share increased just over 10% from $8.73 to $9.62.

Fidelity says because the Reserve Bank has clearly advised all insurers that protecting capital should take priority over paying dividends, no dividend would be paid this year.

The Reserve Bank "expects insurers to take steps to protect, if not build, their capital positions to ensure the industry remains in a strong position to support New Zealanders through Covid-19 and this time of economic uncertainty."” Click here to read more

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FSC: Generations Digital Conference now available on demand

Southern Cross: Southern Cross have moved from Level 1 EY Building to Level 1 Te Kupenga, 155 Fanshawe Street

AMP: AMP receive buyout offer from US investment company

FMA: Consultation: Recognition of Australian adviser qualifications

Southern Cross: Hip replacements add to health insurer's bill


Legal and regulatory update for the life and health sector

28 Oct 2020 – Financial Services Council media release at the time of the AGM advised of a solid year of member growth and increased revenues. https://www.fsc.org.nz/site/fsc1/Media%20Releases/Financial%20Services%20Council%20-%20Annual%20General%20Meeting%20-%20Media%20Release.pdf

30 Oct 2020 – RBNZ signed the ‘IBOR (Inter-bank offer rates) Fallbacks Protocol’ published by the International Swaps and Derivatives Association (ISDA). https://www.rbnz.govt.nz/news/2020/10/rbnz-signs-isdas-ibor-fallbacks-protocol

30 Oct 2020 - The Commerce Commission published a statement of preliminary issues relating to an application from Aon plc seeking clearance to acquire Willis Towers Watson Public Limited Company as part of a global transaction. https://comcom.govt.nz/case-register/case-register-entries/aon-plc-and-willis-towers-watson-public-limited-company

30 Oct 2020 – AMP announced the receipt of an indicative, non-binding, conditional proposal from Ares Management Corporation, a US-based company, to acquire 100 per cent of the shares in AMP Limited by way of scheme of arrangement. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AMP/362281/333930.pdf


Fidelity Life appoints new CEO, and more daily news

Fidelity Life has announced the appointment of Melissa Cantell as the new CEO. Cantell is set to come into the role on 25 January 2021. Cantell will leave her current role as Chief Operating Officer at IAG NZ. Cantell has held various managerial roles and has experience in different areas of business. Until Cantell’s appointment, Simon Pennington and Adrian Riminton will continue as acting CEOs.

“Melissa Cantell has been appointed chief executive at Fidelity Life, replacing Nadine Tereora who left in May 2020.

Cantell has strong executive leadership experience running successful commercial operations across a range of industries. She joins us from IAG NZ where she held the role of Chief Operating Officer, and prior to that was the Executive General Manager Transformation.

She has accumulated a broad range of experiences over her career, from mergers and acquisitions strategy and business transformations to senior general management roles with Fonterra and Coca-Cola Amatil. She loves building great customer, adviser and people experiences, especially in times of change, and is passionate about the role insurance plays in the New Zealand community.” Click here to read more

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FSC: Understanding conflicts of interest and managing gifts and incentives webinar

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Partners Life awarded 5 star rating for 10th consecutive year, and more daily news

Partners Life has been awarded a 5 star rating from the Lewers Life Insurance Benchmarks Study for the 10thconsecutive year. This award is symbolic for Partners Life as it has been awarded a 5 star rating every year since first beginning operations. The Lewers Life Insurance Benchmarks Study works to evaluate the satisfaction of independent financial advisers.

“For the 10th year in a row, we’re very excited to announce we have received a 5-star rating from the Lewers Life Insurance Benchmarks Study.  What makes this extra special is that we have achieved this rating every year since we first opened our doors 10 years ago; the only Life Insurer to achieve a consistent 5-star rating over this entire time.

The Lewers Life Insurance Benchmarks Study measures the satisfaction of independent financial advisers in New Zealand, and this achievement reaffirms for us that we are servicing our financial advisers and as a result their customers, to the highest industry standard.”

More than 300 advisers from across the country participated in the study. Partners Life anticipated a lot of feedback as a result of many changes and amendments being introduced during the past year. Partners Life has acknowledged that the response from other insurers and has said that it is essential for sustainability.

“The Lewers Life Insurance Benchmarks Study was completed by over 300 independent advisers across the country who provided their views on the delivery of all insurance providers in the New Zealand market. In 2020 they spoke to a larger cross section of advisers who deal with Partners Life than in previous years; a critical element in gaining greater depth of feedback on the initiatives we introduced over the past 12 months. We knew that some of the changes we had introduced in the past 12 months would garner significant feedback. Specifically we anticipated there would be a strong reaction to our leadership position in introducing DI product and pricing changes in early 2020 to address the sustainability of the product in the New Zealand market long-term, and we really do appreciate your feedback on how we were placed competitively because of this.  It is heartening to us to see that since the study was completed, there has been significant competitor movement to follow our lead – something we believe is essential for the sustainability of this product line.”

In other news:

Fidelity Life: Senior Marketing Manager role is currently being advertised

FSC: New disclosure regulations: practical implementation webinar

Partners Life: New Adviser Training Course Registration

Partners Life: Ross’s Story