Insurance Sector Facing ‘Testing Times’ – FMA

The insurance industry is facing testing times, and part of the challenge is the current volume of regulatory change, says Clare Bolingford, the FMA’s Director of Banking and Insurance.

Speaking during a webinar organised by the FSC on Wednesday 5 April, Bolingford said New Zealand’s insurance sector is not alone in experiencing significant shifts in market and customer behaviours.

Turning to Australia, she pointed to ASIC’s Commissioner Sean Hughes who says that, “…at the heart of all ASIC’s regulatory endeavours lies a resolute focus to ensure good consumer outcomes”.

In the UK, the FCA states firms there should “…act to deliver good outcomes for retail clients”.

Many people will be encountering financial stress over the coming year…

Bolingford says: “While the legal basis and some of the language differs, there is a strong consistency with the CoFI principle of treating customers fairly.

“This means viewing things from their perspective. That can be during design and distribution planning, and should be in any and all post-sale interactions.

“And it means asking questions like – does the customer need this product? Am I helping them to make an informed decision? Do they understand what they are getting?”

Bolingford also says health and economic environments are having impacts on insurance firms and their customers.

“Many people will be encountering financial stress over the coming year with high inflation, rising interest rates, and the unknowns of long Covid,” she says.

“This is a prime opportunity to demonstrate value to your client base, and not use Covid-19 as an easy excuse to ignore client needs or take focus away from good conduct practices.”

Turning to intermediaries, Bolinfgord says they are “…vitally important for giving customers access to financial products and services”.

“But it is clear to us that the market dynamic between providers and intermediaries does not always facilitate fair treatment,” she says.

“To achieve the right outcomes, it is important there is a sense of shared responsibility for the customer between a provider and any intermediary.”

Bolingford says ‘shared’ means both have the customer at the heart of their respective businesses and “…should work together as partners to ensure customers are treated fairly”.

Read Bolingford’s full speech here.

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