Life insurers have submitted their responses to the Financial Markets Authority and Reserve Bank as their 30 June deadline is now over, following the regulators’ report on conduct and culture of the life insurance sector.
The regulators released their report in January (see: Regulators Life Insurance Report…) and then proceeded to provide individual feedback to the 16 life insurers, each of which had to report back by end of June.
The insurers were required to provide an action plan that the regulators will review, including how they will address incentives based on sales volumes for internal staff and commissions for intermediaries.
The FMA confirmed that they will report on the insurers’ responses.
The regulators asked each insurer to:
1. Develop an action plan to address the feedback, and report their progress.
2. Explain how they will meet the regulators’ expectations regarding staff incentives and commissions for intermediaries.
3. Complete the following exercises and report the results:
– A detailed gap analysis against the final ARC report and all findings relevant to insurance and the sales and advice process for insurance.
– A systematic review of the insurer’s existing life products and policy-holder portfolios in order to proactively identify any conduct and culture risks and issues.
The regulators stated they would take further action if they are not satisfied with the level of urgency applied to addressing the areas of concern and to remediating identified issues.
Asteron Life confirmed it has submitted its formal response to the regulators.
“This review did not uncover any systemic issues in our business, but it did provide insights into a number of areas where we can improve outcomes for customers or mitigate the risk of poor outcomes,” said Graham Hill, Executive Manager Life Distribution.
“We believe that, like us, advisers are committed to creating a better today for our customers and that access to independent financial advice is an important part of ensuring good outcomes for customers,” he added.
“We will continue to collaborate on how we can work together to enhance customers’ financial wellbeing, and how Asteron Life can support advisers to meet key conduct expectations.”
Cigna New Zealand also commented, stating it welcomed the additional insight received from the Reserve Bank and Financial Markets Authority into the report on conduct and culture.
“While we always look at ways to improve our services for our customers, we can’t be complacent. There is always room for improvement,” said Chief Executive, Gail Costa.
“We have provided the regulators with our response in confidence and we are already working on implementing our action plans to further improve New Zealanders’ experience with us.”
“We thank the FMA and RBNZ for their proactive and transparent engagement which has provided us with helpful clarity and direction. We look forward to working with them on this journey to improve the life insurance industry.”
Fidelity Life CEO, Nadine Tereora, says the regulators’ report and recommendations for Fidelity Life contained no surprises.
“We’ve now submitted our response and are getting on with implementing our action plans,” she said, adding, “…we currently have no plans to change our commission structure for our current financial year ending June 2020 and we continue to promote our spread commission model. We also have no plans to change our agency agreements before January 2020 at the earliest.”
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