Insurance Industry says policyholder guarantee scheme unnecessary, and other news

David Hargreaves writes about how insurers are universally against development of a policyholder guarantee scheme on Most policyholders in focus group expressed some willingness to pay a little more for 'fully guaranteed insurance' so long as increased costs would not increase insurer profits.

The Reserve Bank has been pushed back fairly firmly by the insurance industry on suggestions of developing a policyholder guarantee scheme.

Last year the central bank said it was considering introducing a scheme to pay out claims in the event of an insurance company failing.

The concept would effectively insure policyholders against the risk of their insurer collapsing….

"They felt a scheme should be unnecessary if other regulatory settings were correct; would risk moral hazard; would increase costs for policyholders (in a market that already showed signs of underinsurance); and would be an inefficient way of providing protection," the RBNZ said in its submissions summary.

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Government criticised for allocating funds to ACC to work on NZIIS before MBIE’s analysis of consultation on scheme released, and other news

Jenée Tibshraeny writes in NZ Herald of how the government has been critiqued for pushing through legislation to allow ACC to work towards operationalising the NZISS ahead of the Ministry of Business Innovation and Employment’s (MBIE) analysis of submissions made via the consultation process. MBIE has said a formal decision on whether the government will proceed with the scheme will be made in June or July.

MBIE's acting manager of income insurance policy, Francis van der Krogt, told NZ Herald around 2000 people or organisations either made full submissions or answered a shorter-form survey.

He said officials are analysing the feedback and preparing a summary for Ministers, which will be released "in due course".

Asked why the submissions weren't published before the legislation was passed and funding allocated via the Budget, van der Krogt noted the legislation is a "small and relatively technical piece of legislation" that enables ACC to do work it wouldn't otherwise be able to do under existing legislation.

"The work will help inform final decisions. Any substantive legislation to create a New Zealand Income Insurance scheme would go through a full Parliamentary process," van der Krogt said.

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Budget allocates $60 million to establishment of NZIIS and delays implementation to 2024, and other news

On 19 May Finance Minister Grant Robertson presented the Government’s Wellbeing Budget, allocating $60 million to support the continuing development of the New Zealand Income Insurance Scheme (NZIIS).

The amount will fund the Accident Compensation Corporation (ACC) to undertake preliminary work to establish the systems and operational processes for a new levy-funded income insurance scheme.

The proposed implementation has also been pushed back from 2023, with Robertson saying

“There is considerable work to get the scheme up and running, and it is now expected that it will be operational in 2024.”

Insurance Business spoke to Deloitte NZ tax partner Robyn Walker, who said

“The sensible decision to not rush this through means that the New Zealand Income Insurance Scheme may become a significant matter for voters to evaluate as we head into Election 2023.”

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And a bit of light humour from xkcd here

Legal and regulatory update for the life and health insurance sector

12 April 2022 – Retail Payment System Bill read a second time in Parliament.

12 April 2022 – Financial Service Council (FSC) press release highlighted the publication on 4 April 2022 of the latest FSC research report titled, “Money & You – The Lost Generation?”

12 April 2022 – Commission for Financial Capability highlighted Sorted’s release of the entirely rebuilt KiwiSaver fund finder (a mashup of a previous comparison engine of the same name with the platform’s fees calculator) that configures and adapts to KiwiSaver investors’ risk profile and circumstances, aiding them in comparing fund options across the entire KiwiSaver market.

Legal and regulatory update for the life and health insurance sector

20 Dec 2021 – An exposure draft of Australian legislation titled “Treasury Laws Amendment (Measures for Consultation) Bill 2021: Licensing exemptions for foreign financial service providers” was released for consultation, with submissions closing on 12 Jan 2022.

Legal and regulatory update for the life and health insurance sector

7 Dec 2021 – Committee stage of the Births, Deaths, Marriages, and Relationships Registration Bill completed in Parliament.

7 Dec 2021 – ASIC in Australia launched a Financial Advice Hub for advice licensees and advisers.

Legal and regulatory update for the life and health insurance sector

17 Nov 2021 – FMA released three new self-assessment tools to help financial advice providers prepare for full licensing. The tools include:

  • Record keeping self-assessment tool
  • Cyber security and BCP self-assessment tool
  • Key outsourcing arrangements self-assessment tool

17 Nov 2021 – Under “FMA stories,” FMA released comment on its website on mandatory climate-related disclosures – a new regime for NZ and the FMA.

17 Nov 2021 – FMA consultation webpage updated in relation to the consultation completed on the “Proposed class exemption for restricted schemes from certain disclosure and reporting obligations.”

17 Nov 2021 – NZ Treasury published a paper titled “The Wealth Ladder: House Prices and Wealth Inequality in New Zealand.”

17 Nov 2021 – The Incorporated Societies Bill second reading was completed in Parliament.

Legal and regulatory review for the life and health insurance sector

10 Nov 2021 – Reading of the following Bills completed in Parliament as shown

11 Nov 2021 – FMA consultation website updated as follows:

Legal and regulatory update for the life and health insurance sector

31 Aug 2021 – RBNZ released an IPSA consultation titled Options Paper 2, Policyholder Security under the Insurance (Prudential Supervision) Act Review. Submissions close 15 November 2021.

31 Aug 2021 – The Advertising Standards Authority released a consultation on the draft ASA Financial Advertising Code. Submissions close 12 October.