The sale of AMP Life to Bermuda-based Resolution Life has called into question the rules that apply to such transactions.
The transfer of the insurance business was given the blessing of the Reserve Bank of New Zealand last week following 18-months of negotiations (see our story: Sale Of AMP Life Gets Green Light).
But a petition calling for an urgent review of the law that applies to these types of business transfers will be heard on Wednesday (1 July) at Parliament.
Andrew Body, an AMP Life policyholder and investment banker, will speak before a government finance and expenditure committee to air his concerns and those of his petition’s 743 supporters.
Body’s petition reads: “That the House of Representatives urgently review the Insurance (Prudential Supervision) Act 2010 to ensure New Zealand life insurance policyholders (including AMP Life policyholders) are treated fairly and transparently in the sale and operation of life insurance businesses, through seamless supervision by the FMA and RBNZ.”
Body says the reason for his petition is that the act enables the purchase of AMP Life by Resolution Life without AMP’s 200,000 New Zealand policyholders receiving information or approving [the sale].
The act needs urgent review to ensure reasonable protection of the interests of AMP and other policyholders…
“The act does not cause seamless supervision by FMA and RBNZ,” he said. “I believe this is contrary to best practice. The act needs urgent review to ensure reasonable protection of the interests of AMP and other policyholders.”
Speaking on Radio New Zealand’s Nine-to-Noon programme on Monday 29 June, Body said the Prudential Supervision act “very narrowly focuses on insolvency and the ability of a life insurer to pay as required”.
During the radio broadcast one listener said they had cancelled their AMP Life policy as a result of the transfer. It is a situation some financial advisers may be faced with over the coming weeks if an AMP Life policyholders calls to explore their options.
Katrina Shanks, CEO of Financial Advice NZ, says AMP Life customers looking to cancel their policy should tread with caution.
“When looking at transferring policies consumers and advisers should be careful in how they proceed and to understand how the different policies respond,” she said.
“For example, suicide exclusions and stand down periods on major health conditions will be imposed on the new policy which may result in being declined for a claim if an event happened within the exclusion period.
“If they have developed health conditions since the AMP cover was implemented, will these conditions be covered under the replacement policy?”
RBNZ’s Deputy Governor and General Manager for Financial Stability Geoff Bascand last week issued a statement saying that while AMP Life will have a new owner, “existing policy entitlements are unaffected by this transaction”.
According to the Resolution Life website the company has bought 160 life insurers, has 10 million policyholders, manages 28 insurance companies, and has US$320 billion in managed assets. The company was founded by Sir Clive Cowdery.