Culture and conduct across the insurance sector will be a key focus of the FMA this year, says Clare Bolingford (pictured), the regulator’s Director of Banking and Insurance.
Speaking at the FSC’s Outlook 2021 breakfast event at the Auckland Hilton on 3 February, Bolingford told a capacity audience of 250 financial industry workers (plus 20 online) that the regulator expects insurers to maintain the momentum it has established over the last 18 months in supporting its clients.
“We now want you to consider how you can embed good practices over the long term. And how you know that good outcomes are being achieved,” she said. “This will enable a smooth transition to the new regime that’s coming into place.”
Bolingford drove home the message that culture, conduct, and the needs of consumers – particularly vulnerable consumers – remain key priorities for the FMA and her new team of banking and insurance industry specialists.
“We are seeing good examples of firms supporting customers during the pandemic,” she said. “But early feedback from stakeholders showed there is a lot more than can be done to embed this support across insurers’ activities – rather than relying on one-off initiatives.”
Product and customer communications need further simplification for all customers…
Making insurance products easier to understand by consumers is also on the FMA’s radar.
“Product and customer communications need further simplification for all customers,” said Bolingford. “We have too often seen that complex products are not understood. And more needs to be done here so that people know what they are buying and know how the product will perform when they need to use it.
“We believe this is the responsibility of both the providers and the distributers. And communications need to be relevant and recurring over the time of the product.”
Bolingford says while the move to digital systems creates opportunities for insurers, it also presents risks.
“System changes can lead to unintended customer harm when these are not properly executed – and this is a recurring theme that we see in our monitoring visits,” she said.
“Services still need to remain to cater for all customers and we know that digital can exclude some of the most vulnerable.”
And insurers who point to external providers when hiccups occur may need to think again.
“It is important to make sure that your outsourcing agreements stand up to the same tests of good risk management – from claims management to technology partners,” she said.
“It is easy to say ‘that’s not us’ when things go wrong. But the ultimate responsibility in ensuring good customer outcomes still rests with you.
“Our goal is confident consumers and building trust in the industry through better conduct.”