Legal and regulatory updates for the life and health insurance sector

15 Sept 2020 – NZ Police FIU and ACAMS issued invitations to the 2020 AML/CFT conference to be held between 10-11 November 2020, providing for both on-site and virtual conference access. https://www.police.govt.nz/advice-services/businesses-and-organisations/financial-intelligence-unit-fiu/fiu-acams-conference

17 Sept 2020 – RBNZ released the outcomes from a COVID-19 stress test of New Zealand banks. https://www.rbnz.govt.nz/news/2020/09/stress-test-reinforces-importance-of-bank-capital

18 Sept 2020 – DIA advised on its website of the release of an AML/CFT Supervisors updated enhanced CDD guideline, dated August 2020, noting also the intent to shortly publish a webinar on its website which will deep dive into the enhanced CDD obligations. https://www.dia.govt.nz/AML-CFT-Updated-enhanced-CDD-guideline


Reserve Bank of New Zealand on insurers paying dividends

Jenée Tibshraeny, writing at interest.co.nz says that The Reserve Bank of New Zealand (RBNZ) is advising insurers against paying dividends:

“Our stance in relation to prudential risks to insurers from Covid-19 is that there are many unknowns still to play out in terms of flow-on impacts from what we have already experienced, as well as the potential for new outbreaks,” Bascand said in a speech to the Insurance Council of New Zealand (ICNZ) on Monday.

“This caution is also reflected in our stance on capital retention and dividend payments, which we regard as being imprudent under these conditions.

"We will update insurers on our stance on this at or before publication of the next Financial Stability Report in November.”

Although this is guidance, and tougher instructions were issued to banks, it would be very difficult for an insurer to ignore such advice. It should be hoped that it is temporary. Well-capitalised insurers would be justified in wondering why they were being treated the same as a thinly capitalised business. In the medium term, the absence of a the ability to pay a dividend may make it materially harder for an insurer to raise capital, acting against the intention of the advice. I therefore expect that the suspension will have a limited duration allowing for assessment of the difficulty of transitioning to an environment of negative interest rates. 

 


Reserve Bank announces review of the Insurance (Prudential Supervision) Act and more daily news

RBNZ has announced that it will be relaunching its review of the Insurance (Prudential Supervision) Act next month. The review comes after an industry consultation begun in 2017. The same consultation was set to continue earlier this year but was delayed as a result of COVID-19 related regulatory relief being implemented. Geoff Bascand, Deputy Governor and General Manager of Financial Stability, has said that maintaining an efficient insurance sector is important as customers expect to insure their assets and themselves.

“The Reserve Bank – Te Pūtea Matua will be relaunching the review of the Insurance (Prudential Supervision) Act (IPSA) in October.

The review began with an industry consultation in 2017 and was set to resume in March this year, but was delayed in-line with the regulatory relief implemented to free up the Reserve Bank and industry participants to support our economy and tackle the challenges created by COVID-19.

“Maintaining a sound and efficient insurance sector is important for New Zealand,” Deputy Governor and General Manager of Financial Stability Geoff Bascand says.

“Customers expect to be able to insure their homes and possessions and obtain life and disability insurance, and businesses utilise a range of insurance products to protect their assets and business interruption exposures,” Mr Bascand said in an address to the Insurance Council today.”

In 2010 the original Act was enacted to ensure that New Zealand was up-to-date with international standards for prudential regulation. The reason behind the enactment has not changed. The first Christchurch earthquake influenced that Act. International Monetary Fund assessment in 2017 and the independent review of Reserve Bank Supervision of CBL in 2019 have also influenced the Act. A policy paper is set to be published early next month and will detail the resumption, objectives topics, and timetable.

“The original IPSA was enacted in September 2010 to bring New Zealand up-to-date with international standards for prudential regulation. The reasons for enacting IPSA have not changed, and it is good regulatory practice to review legislation to ensure it is working effectively and update it for the lessons learned over the past 10 years, Mr Bascand says

The first Canterbury earthquake, for example, devastatingly occurred just a few days before the enactment of IPSA, resulting in intense supervisory activity and application of IPSA provisions over many years.

Other recent experiences that will help inform the IPSA review include an International Monetary Fund assessment in 2017 and the independent review of Reserve Bank Supervision of CBL in 2019. Further background and context has been provided by the joint Reserve Bank/Financial Markets Authority review into insurer conduct and culture, and the Thematic Review of the Appointed Actuary regime. The associated Solvency Standards need to be updated for impending changes to accounting standards and the review will consider adopting a mandatory buffer above the minimum solvency level.

A policy paper outlining the of the IPSA Review, and objectives and topics to be covered, will be published in early October. It will provide an updated overview explaining objectives, topics to be covered and an indicative timetable. At the same time, we will also release a consultation paper on principles to guide the review of Solvency Standards.” Click here to read more

 In other news

Accuro: Mel Stevens appointed as People and Culture manager

AIA: AIA has earned a place in the Hang Seng Corporate Sustainability Index, receiving an A+ rating and increasing its overall score

FMA: Pegasus Markets And Director Found Guilty Of Abusing FSPR


Legal and regulatory update for the life and health insurance sector

9 Sept 2020 – IRD issued guidance on the taxation of cryptoassets. https://www.ird.govt.nz/cryptoassets

10 Sept 2020 - Financial Advice New Zealand have created a Virtual Conference/ Regional Roadshow, with the conference hosted over four regions in a different region each day over 21-24 Sept, with the Auckland event being online. https://financialadvice.nz/conference-2020-home/

14 Sept 2020 - The Reserve Bank announced that it will be relaunching the review of the Insurance (Prudential Supervision) Act (IPSA) in October 2020. A policy paper outlining the resumption of the IPSA Review, and objectives and topics to be covered, will be published in early October. It will provide an updated overview explaining objectives, topics to be covered and an indicative timetable. At the same time, the RBNZ will release a consultation paper on principles to guide the review of Solvency Standards. https://www.rbnz.govt.nz/news/2020/09/work-on-insurance-act-review-resumes


Legal and regulatory update for the life and health insurance sector

9 Sept 2020 – The RBNZ announced that Deputy Governor and General Manager of Financial Stability Geoff Bascand will be delivering a speech to the Insurance Council of New Zealand on Monday 14 September outlining the Reserve Bank’s review of the Insurance (Prudential Supervision) Act 2010. The speech and media release will be made available on the Reserve Bank website at 2:00 pm on Monday, 14 September 2020.

9 Sept 2020 – The Privacy Commission issued the Privacy News update via e-mail containing further information on the upcoming implementation of the Privacy Act 2020 from 1 Dec, including a free online tool called P20BOT to assist organisations to understand the upcoming changes in the Privacy Act. The online tool produces customised preparedness reports for an organisation, based on the answers provided. https://stoplookgo.co.nz/get-prepared-for-the-privacy-act-2020-with-p20bot/

10 Sept 2020 - The FMA guide to investing in bonds has come under fire. Good Returns quote Tony Hildyard of Hunter Investments, commenting on the FMA investor bond guide, available at https://www.goodreturns.co.nz/article/976517472/bond-specialist-raises-concerns-over-recent-fma-guidelines.html

 


Asteron Life introduces mental health support, and more daily news

Asteron Life announced that the Best Doctors service will provide free access to different mental health experts to customers with disability insurance. The service will allow customers to access general advice as well as services from psychologists and psychiatrists. 

“Asteron Life today announced that customers with disability insurance will now have access to the Best Doctors service at no additional cost. The Best Doctors package provides direct access to a multidisciplinary team of mental health experts, including psychologists and psychiatrists, as well as general advice on mental health conditions and guidance on how to navigate the mental health system.”

Graham Hill, executive manager Life Distribution said that Best Doctors works to ensure customers are connected and make medical decisions with confidence. Graham continued by saying that having access to expert medical advice in the current environment is relevant while Mike Morris, the country manager of Best Doctors said that the importance of virtual care has been highlighted this year.

“Best Doctors connects our customers with leading medical specialists, and enables them to make medical decisions with confidence,” says Graham Hill, executive manager Life Distribution at Asteron Life. “Like insurance, the service is really about being there for people when it matters.”

 

Hill says that in the current Covid-19 environment, mental health support and the ability to get expert medical advice from your own home is particularly relevant.

 

Mike Morris, the country manager of Best Doctors has said “This year has shown us that virtual care is incredibly important and effective. There has never been a better time to offer people access to virtual care and we’re delighted to be bringing new services to Asteron Life customers.”” 

Asteron Life is offering advisers virtual training sessions. Times available are:

·       09:30am – 10:30am, September, Wednesday 9

·       09:30am – 10:30am, September, Thursday 10

·       09:30am – 10:30am, September, Monday 14

·       09:30am – 10:30am, September, Monday 21

·       09:30am – 10:30am, September, Monday 28

 

Click here to register

Click here to read more

 

In other news

RBNZ: Has the Reserve Bank responded differently to upturns and downturns in inflation and economic activity?

FMA: COVID-19 response insights

Financial Advice webinar: Panel Discussion: Obtaining or Updating your Level 5 Qualification in Financial Services

 


Deloitte report on the New Zealand life insurance sector

Deloitte's report on the New Zealand life insurance sector provides a comprehensive overview of the structural differences between the New Zealand environment and the markets with which it is often compared. It provides context for the comparisons that are inevitably made as part of the debate over issues such as efficiency, commission payments, claims ratios, and channel mix. Rather than give quantitative answers to challenges - such as concerns about the level of commissions - it seeks first to explain the situation. Some assertions are made, usually about the possible causes of some features of the market, but refreshingly, without advocating for any particular prescription. Except for one: the report suggests caution. I think that is wise. Dramatic changes have been made to the Australian life insurance sector. It appears to be much the worse for them. In a sector where contracts are commitments for decades of cover, often with fixed terms, and sometimes with fixed premiums, it seems wise to exercise caution. Anyone writing a background paper for a strategy session would do well to set this as background reading or use the issues as a checklist for their decision-screens. What solutions you may bring to each of the issues, that will be up to you. Link: https://www2.deloitte.com/nz/en/pages/financial-services/articles/deloitte-issues-paper-life-insurance-sector.html#  


Financial Advice conference recipient of Government funding, and more daily news

It was announced that MBIE’s $10 million Domestic Events Fund was set up to support events. Financial Advice NZ has been named as one of the 200 recipients.  The funding was granted to Financial Advice NZ for their 2020 Bounce conference.

“The $10 million Government fund was set up to support the events industry despite the disruption of Covid-19.

Financial Advice NZ received funding for its conference this year, which is set up as a series of roadshow events across the country. The events can be attended online or in-person. The association will decide this weekend whether to go ahead with an in-person Auckland event.”

Katrina Shanks has said that the funding is fantastic and would allow them to have certainty.

“Financial Advice NZ chief executive Katrina Shanks said the funding would allow the association to have some certainty as it worked with the events company delivering its conference this year.

“It’s fantastic for them. It’s yet another industry that’s had a huge hit from Covid.” Click here to read more

In other news:

AMP: AMP announced that it is considering selling all, or some, of its assets, various stories, but this one in the AFR is recent

Partners Life: Expressions of interest is now open for the September 2020 New Adviser Training Course

RBNZ: Same objectives, different challenges


Legal and regulatory news update for the life and health insurance sector

27 Aug 2020 – FMA announced the appointment of Paul Gregory to the newly created role of Director of Investment Management.

https://www.fma.govt.nz/news-and-resources/media-releases/fma-appoints-new-director-of-investment-management/

27 Aug 2020 - RBNZ have issued advice to the financial services sector from the National Cyber Security Centre regarding recent cyber attacks that appear to be aimed at the financial services sector. The most high profile example has been the NZX experience. However, other companies may expect to be attacked.


Legal and regulatory news for the life and health insurance sector

25 Aug 2020 – NZX decided to halt trading early as it “experienced a volumetric DDoS (distributed denial of service) attack from offshore, which impacted NZX system connectivity.”

26 Aug 2020 - ANZ Investment Services (New Zealand) Ltd announced it will stop accepting new investment into the Bonus Bonds Scheme and, following two further prize draws, will wind up the scheme over the next year.

https://news.anz.com/new-zealand/posts/2020/08/bonus-bonds-announcement

26 Aug 2020 – RBNZ advised that the Ministry of Health granted an exemption to enable registered banks and licensed non-bank deposit takers to carry out critical financial services at Alert Level 3.

https://www.rbnz.govt.nz/news/2020/08/banks-and-nbdts-under-covid19-alert-level-3-august-2020

26 Aug 2020 – Stats NZ reported that incomes fell for the first time since records started in 1998.

https://www.stats.govt.nz/news/incomes-fall-for-first-time-on-record