FMA and RBNZ Report on Life Insurer Conduct and Culture
The regulators found extensive weaknesses in life insurers' systems and controls, with weak governance and management of conduct risks across the sector and a lack of focus on good customer outcomes.
Other key findings:
* Limited evidence of products being designed and sold with good customer outcomes in mind.
* Some insurers did little or nothing to assess a product's ongoing suitability for customers.
* Sales incentives structures risk sales being prioritised over good customer outcomes.
* Where sales were through an intermediary, there was a serious lack of insurer oversight and responsibility for the sales and advice, and customer outcomes.
* Remediation of conduct issues is generally very poor, with insurers slow to respond to issues and in some cases not sufficiently remediating them.
The review did not find widespread cases of misconduct on the part of life insurance companies. However, there were several instances of poor conduct. There were also a small number of cases of potential misconduct (ie: breaches of the law) that are now subject to investigations by the appropriate regulator.
Some of the issues and themes are similar to those highlighted in the
Next steps
All 16 life insurers will receive individual feedback. By
Concerns for consumers
Purchasing life insurance is one of the most important financial decisions people will make. Customers should be able to have confidence their insurance will do what the insurance company or their financial adviser has told them. Many customers do experience the benefits of their insurance policies every year.
A positive finding in the report showed that, in general, frontline claims teams were focused on good outcomes with a strong desire to do the right thing for their customers.
The purpose of the thematic review and the report's recommendations are to ensure the industry responds with urgency to the issues identified.
Further information and guidance for consumers can be found here
Regulatory issues
Insurer conduct is currently only regulated indirectly through the FMA's regulation of financial advice, which is generally provided by intermediaries. No one regulator has oversight of insurers' and intermediaries' conduct over the entire insurance policy lifecycle.
The report sets out some areas where the regulators recommend that the Government consider addressing regulatory gaps, similar to those put forward in our review of banks. The regulators acknowledge further policy work will be required and that any additional regulation will need to drive better outcomes for customers.
Western Massachusetts Manufacturing Companies Build Facility, Buy Equipment With $2.8 Million MassDevelopment Bond
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News