Chatswood serves the life and health insurance sector in New Zealand with market intelligence, data, and bespoke consulting services. Some of these are provided in conjunction with Quality Product Research Limited - a subsidiary that brings you Quotemonster.
We believe that good decisions are more likely to occur when we have good information about the market environment in which we operate. Intuitive leaps and creative decisions are always required, of course, but the more they are based on a firm foundation of observation, the better they tend to be.
KiwiSaver determined to be competitive
The latest Melville Jessup Weaver analysis has determined that KiwiSaver is statistically competitive.
The latest Melville Jessup Weaver analysis has determined that KiwiSaver is statistically competitive. Competitiveness, as measured by the Herfindahl-Hirschman Index (HHI), improved slightly year on year. There are 38 schemes and 34 providers available for kiwis to choose from, with the three largest owners (ANZ, ASB and Fisher) accounting for around half of scheme members and assets. There was a slight shift in favour of providers outside the 10 largest, who expanded their market share by 0.5% during the 12 months to March 31.
More news:
FSC to hold member meeting on XRB Consultation
Banking Ombudsman Scheme received 6,054 cases
ANZ announce official partnership with Auckland Football Club
Legal and regulatory update for the life and health insurance sector
ASIC issue update on licensing; AML/CFT reforms to come; FMA research on KiwiSaver providers; RBNZ publish Governor's speech on improving Māori access to capital; APRA release June 2024 quarter insurance statistical publications; Updated AML/CFT Programme Guideline released.
11 Oct 2024 - ASIC issues 2023-24 update on licensing and professional registration activities. https://asic.gov.au/about-asic/news-centre/news-items/asic-issues-2023-24-update-on-licensing-and-professional-registration-activities/?altTemplate=betanewsroom
13 Oct 2024 - The Government will reform New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) system. https://www.beehive.govt.nz/release/government-provide-significant-regulatory-relief-business
14 Oct 2024 - Research from the FMA has found most KiwiSaver providers are well placed to manage their exposure to the commercial real estate market but more work can be done to mitigate and communicate the risks. https://www.fma.govt.nz/news/all-releases/media-releases/research-on-cre-and-the-kiwisaver-industry/
14 Oct 2024 - RBNZ publish Governor Adrian Orr's keynote speech: Improving Māori Access to Capital. https://www.rbnz.govt.nz/hub/news/2024/10/improving-maori-access-to-capital
14 Oct 2024 - APRA has released its suite of quarterly industry aggregate insurance statistical publications for the June 2024 quarter. https://www.apra.gov.au/news-and-publications/apra-releases-quarterly-insurance-statistics-for-june-2024
14 Oct 204 - The Department of Internal Affairs, the Financial Markets Authority and the Reserve Bank of New Zealand have released the updated Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Programme Guideline. https://www.dia.govt.nz/Updated-AML-CFT-programme-guideline---October-2024
KiwiSaver financial hardship withdrawals continue to rise
KiwiSaver hardship withdrawals are up significantly from this time last year. We take a look at the limited set of circumstances under which members can make hardship withdrawals.
There is a limited set of circumstances under which members can make hardship withdrawals: if you cannot pay your minimum living expenses; if you can’t keep up with your mortgage or rent; if you need to modify your home to meet special needs; if you need to pay for medical treatment or funeral expenses; or if you’re suffering from a serious illness. The withdrawal function is intended to be a last resort when you have no other options available.
The Financial Services Council has a set of guidelines illustrating how applications will be covered. The intent is to limit withdrawals to meet the basic necessities of everyday living. For example, accommodation expenses can include rates, insurance and basic maintenance but if someone was living in excessively luxurious accommodation and could move to more modest accommodation their excess accommodation costs aren’t regarded as a ‘minimum living expense’. Members are generally unable to claim for things like paying off fines, hire-purchase debt for non-essential expenses or travel to see a sick relative.
So how do members file for a financial hardship withdrawal? Members need to fill out the application, which can include a lot of paperwork – you may need to provide bank statements, proof of identity, pay slips, proof of address, quotes, information about your partners income, assets and expenses and so on. If a member is applying as they cannot meet their minimum living expenses, KiwiSaver Managers and Supervisors will use a weekly budget spreadsheet to analyse the members income, expenses, assets and liabilities to determine if there is a deficit. The budget will take into account basic food and grocery items, accommodation and associated costs such as rates, basic clothing, utilities, transport (up to two vehicles per household and public transport as applicable), general and medical insurances, medical and dental costs (excluding non-essential medical costs such as cosmetic dental treatment), school attendance costs, purchase and maintenance of normal and basic household items, reasonable costs for dependants with special needs.
The member may also need to show they had tried to find other ways of getting by, like accessing government assistance schemes or arranging different repayment arrangements from the bank. Reasonable alternative sources of funding need to have been explored and exhausted – If you have other liquid savings or investments, you will most likely need to have used those up first before withdrawing from KiwiSaver is an option.
After a holistic assessment of the member’s circumstances, if the member establishes they are unlikely to be able to meet minimum living expenses, then the withdrawal is permissible.
If you have a serious illness, you can withdraw up to the full value of your accumulation; however, if you are withdrawing due to an inability to meet minimum living expenses then you will generally be approved for living cost payments in 13 week allocations.
More news:
FMA chief to speak at Financial Services Federation conference
BNZ, Westpac and ASB offer assistance to customers affected by severe weather
FMA acts against misleading customers
The Financial Markets Authority (FMA) has been busy, with the news this week full of stories of AA Insurance New Zealand Ltd (AAI) being ordered to pay a penalty and civil proceedings lodged against ASB Bank Limited (ASB).
The Financial Markets Authority (FMA) has been busy, with the news this week full of stories of AA Insurance New Zealand Ltd (AAI) being ordered to pay a penalty and civil proceedings lodged against ASB Bank Limited (ASB).
AAI was ordered to pay a penalty of $6.175 million, for failing to apply multi-policy and membership discounts, as well as guaranteed no claims bonuses.
AAI was found to have misled customers about its multi policy discount offer in marketing material – marketing material said existing policy holders who added another policy would receive the discount immediately; however, AAI’s systems only applied the discount once the original policy came up for renewal. This issue affected 112,463 customers, who were overcharged approximately $4.89 million. In addition, AAI failed to apply discounts promised to NZAA members, affecting 90,129 customers who were overcharged approximately $2.95 million in total.
AAI were also found to have misrepresented that certain eligible customers would receive its guaranteed no claims bonus “for life”. Up until December 2011 AAI offered the bonus for each customer’s lifetime, as long as they remained insured with AAI. From 2012 the benefit only applied to the policy’s lifetime – yet AAI marketing continued to use the “for life” language without limitation. This affected 17,973 eligible customers, who were overcharged approximately $3.28 million.
Margot Gatland, FMA Head of Enforcement, said of the AAI judgement,
“AAI’s systems proved to be inadequate and its marketing was not kept in line with internal policies. This judgment sends a strong message to the industry that companies need to ensure their systems and processes are fit for purpose and customers’ interests put first.”
The FMA has filed civil proceedings against ASB for allegedly making false or misleading representations in regards to insurance products and banking services. Similar to AAI, ASB allegedly failed to apply multi policy discounts on ASB-branded insurance products, due to errors in the manual process at point of sale. Another issue arose when ASB staff misinformed customers with policies of insurance for caravans and trailers that they were eligible for the multi policy discount, despite those policies being ineligible. ASB also allegedly failed to consistently apply fee exemptions to certain customer accounts with access to ASB’s Fastnet Banking service, again due to failings in the manual processes. Between April 2014 and May 2022, a total of 23,062 customers were affected by the multi policy discount issue with the total value of overcharged premiums being approximately $2.8 million. During the same period, 2,435 customers were affected by the Fastnet Banking issue, totalling approximately $1,147,276 in overcharges. ASB has completed remediation work on both causes of action and has repaid affected customers, including use of money interest, and they self-reported the errors to the FMA.
Both of these cases demonstrate the willingness of the FMA to prosecute organisations who don’t fulfil their obligations to customers. They also highlight the importance of language in customer communications being crystal clear and that it is essential organisations have the systems-wide processes and checks in place to honour any discounts and offers made to customers. The FMA expect that if you make commitments to customers, you need to keep them, which we think is fair enough.
More news:
FSC sees opportunities for increased contributions to KiwiSaver
KiwiSaver has been in the news recently with the FMA releasing their KiwiSaver Annual Report 2024. The FSC have welcomed the insights from the FMA report and said they see opportunities for increased contributions.
KiwiSaver has been in the news recently with funds under management surpassing the $100b mark and the Financial Markets Authority (FMA) releasing their KiwiSaver Annual Report 2024. The Financial Services Council (FSC) have welcomed the insights from the FMA report and said they see opportunities for increased contributions. Kirk Hope, CEO of the FSC said,
“With KiwiSaver funds under management surpassing the $100bn mark, this is a great opportunity to look at KiwiSaver contribution settings and how we can make it affordable over time so that New Zealanders can have dignity in retirement.”
“Increasing contribution levels, in combination with financial literacy that helps New Zealanders understand the benefits and mechanisms of KiwiSaver, are key to driving better retirement outcomes,”
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nib join the Sustainable Business Council NZ
Asteron Life, Chubb Life & Fidelity Life are finalists at the New Zealand Insurance Industry Awards
Fidelity Life employees have unlimited access to LinkedIn’s library of courses
IFSO take their first enforcement proceeding against a Participant
Jon-Paul Hale recommends advisers are clear in explaining unfunded medicines
Workplace Savings End of Year Function 2024 on 4 November
Fidelity Life offer advisers opportunity to go on professional development course
FinTech NZ Annual Meeting on 6 November
Mental Health Minister announces Child and Youth Mental Health and Addiction Prevalence Survey
Legal and regulatory update for the life and health insurance sector
XRB to publish consultation on climate; FMA report on KiwiSaver; RBNZ submit on banking competition.
24 Sep 2024 - The External Reporting Board (XRB) has announced that within the month they will publish a consultation document exploring options for transitional adjustments to the Aotearoa New Zealand Climate Standards. https://www.xrb.govt.nz/news/latest-news/
24 Sep 2024 - The Financial Markets Authority have published their KiwiSaver Annual Report 2024. https://www.fma.govt.nz/library/reports-and-papers/kiwisaver-report/
26 Sep 2024 - The RBNZ have published their submission to Parliament’s Finance and Expenditure Committee Inquiry into Banking Competition, which outlines the RBNZ’s financial stability mandate, and highlights areas where they can support competition in the banking sector. https://www.rbnz.govt.nz/hub/news/2024/09/rbnz-releases-banking-competition-select-committee-submission
New Active Benefits are now available to Accuro policyholders
Accuro Policyholders now have access to a range of Active Benefits, as part of their UniMed membership.
Accuro Policyholders now have access to a range of Active Benefits, as part of their UniMed membership. While policy cover remains the same since the transfer of Accuro’s insurance portfolio to UniMed on 31 May, Accuro members can now access a range of UniMed member benefits. Benefits include:
20% off sitewide Parachute first aid (available until 31 Oct 2024)
15% Off Allianz Travel Insurance
20% Off MoleMap Checkups
30 days free at Snap Fitness
Get an intro to 9Round Fitness
Free Hearing Health Checkups
Discounts at Specsavers Optometrists
More news:
FSC webinar 'Cultivating mental wellness at work' 10 October
ANZIIF offer an Insurance Risk Management Study Course
TSB are looking for a Head of Customer Operations
Entries to the Southern Cross Wayfinder Awards close 30 September
Terry Ball says Robo-advice has a long way to go
KiwiSaver passes milestone of $100 billion of funds under management
The Banking Ombudsman Scheme saw a record number of cases
Calls for a public education campaign around consumer data right (CDR) regime
Committee recommends Contracts of Insurance Bill moves forward
New Zealand’s Finance and Expenditure Committee has recommended that the Contracts of Insurance Bill move forward. After reviewing the bill, the committee proposed several key amendments.
New Zealand’s Finance and Expenditure Committee has recommended that the Contracts of Insurance Bill move forward. After reviewing the bill, the committee proposed several key amendments:
Insurers are allowed reasonable time to gather information when processing claims.
That dishonesty be treated as a lack of reasonable care rather than outright fraud.
That a power to create some regulation of the use of genetic tests in underwriting is included in the draft law.
Government officials anticipate the bill to be passed by the end of this year. Changes insurers will need to prepare for once the bill comes into force include reviewing existing contracts to ensure compliance with new consumer protection measures; preparing for potential regulations on the use of genetic data; and ensuring claims processing procedures meet the new ‘reasonable time’ requirements.
With regard to the power to regulate the use of genetic tests, the report states:
“We agree that this issue is important. Our view is that a cautionary approach to genetic testing is needed to avoid undue genetic discrimination. However, we also grappled with the question of how to address genetic testing in this bill. We considered the implications of different options, including a full legislative ban on “genetic discrimination”.
“Ultimately, we recommend inserting new regulation-making powers, in Part 3, new subpart 4A (clauses 86A, 86B, and 86C), that would enable the Governor-General, on a recommendation of the Minister, to prohibit or regulate the conduct of insurers in relation to genetic testing. Before recommending any regulations, we expect the Minister to conduct a full policy development and consultation process.”
More news:
Financial Advice NZ webinar 'Creating an equitable advice experience for couples' 25 September
Consultation for the Government’s draft Suicide Prevention Action Plan 2025-2029 opens
From 1 October 2024, Keytruda will be funded for eligible people with certain cancers
The FSC release their latest Money & You Report
The FSC have released their latest Money & You Report, ‘Consumer Resilience and the Road to Prosperity’. It paints a picture of New Zealander’s who have struggled with the cost-of-living crisis and are feeling financially pressured to the extent they have changed their spending habits, decreased their savings and have concerns about their ongoing ability to service debt.
The FSC have released their latest Money & You Report, ‘Consumer Resilience and the Road to Prosperity’. In all it paints a picture of New Zealander’s who have struggled with the cost-of-living crisis and are feeling financially pressured to the extent they have changed their spending habits, decreased their savings and have concerns about their ongoing ability to service debt.
Some key findings include:
49% are somewhat or very unconfident in the overall economy (up from 45% in 2023), with women older generations and Europeans more likely to be unconfident in the economy. Those who are receiving financial advice are more positive about the impact of the economic climate.
94% of respondents are concerned about financial issues, with the cost of living cited as respondents’ top financial concern (66% very concerned), followed by inflation (51% very concerned) and house prices (45% very concerned).
Financial pressures have resulted in a change in spending habits, with buying cheaper groceries (57%) and cutting back on takeaways (55%) and treat purchases (49%) the most common changes. Concerningly some New Zealanders have reported skipping meals (17%), limiting heating (24%) and avoiding medical treatment or skipping medication (16%).
31% of New Zealanders were unhappy with their financial situation this year (up from 22% in 2023 and 25% in 2022).
There has been a drop in the number of retirees with more than 10 years of retirement savings, and an increase in those with less than one year of current retirement savings.
82% hold investments, with KiwiSaver the most likely held investment type.
Troubling KiwiSaver trends include average member weekly contributions dropping 7.8% (comparing 2023 to 2021); hardship withdrawals are at an all-time high; the KiwiSaver gender gap continues to increase, now sitting at a $7,450 average balance difference between males and females. Most worryingly, the average KiwiSaver member who has been contributing all their working life may not have enough to support them during retirement, according to Massey University Retirement Expenditure Guidelines.
Those who have struggled to make recent debt payments have been more proactive, with 29% reaching out to their bank (up from 20% in 2023) or speaking to family or friends (38% up from 28%).
Research was conducted via online survey, with 2,002 respondents completing the data during March 2024.
More news:
Chubb Life Chief Executive Gail Costa is to retire in April 2025
Anna Schubert talks through self-development tips for advisers
Tony Vidler suggests how advisers can create compelling offers
Clive Fernandes writes of how AI can help personalise financial advice
‘Inspiring Success’ event takes place on 7 November in Auckland
mySolutions webinar 'SimpleWills and your estate' 11 September
Debate whether it is it time to boost KiwiSaver contributions at FSC pre-conference session
Value For Money report highlights top performing ethical KiwiSaver funds
Lloyd Burr writes about how hard it is to start a new bank in NZ
Inland Revenue is proposing to make fees charged for fund management exempt from GST
Simon Papa on what the Commerce Commission’s Banking report could mean for advisers
Simon Papa has written an excellent analysis of what the Commerce Commission’s final report on competition in the personal banking services sector could mean for mortgage advisers on Good Returns.
Simon summarises the recommendations likely to impact mortgage advisers, cautions that some of the recommendations may look different once implemented and acknowledges the Commission’s engagement with the advice sector after they released their March 2024 draft report. Simon posits that the recommendation that advisers make more applications to multiple banks is likely to result in more work for advisers, though this may be offset by banks improving application systems and making offers more comparable (and we’d love to hear what you think will end up happening!). Simon also discusses what a best interests duty could mean for advisers. It's a great read and we suggest you check it out.
We reached out to Simon around what advisers could do in light of these recommendations and he advised,
“Changes to law are required to implement most of the Commission’s recommendations. So advisers will have an opportunity to make submissions on the law changes. They can also try to engage with MPs and officials. Professional bodies will also get involved, so advisers can talk to them about adviser concerns.”
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TSB to pay $2.47m penalty for CCCFA breaches
BNZ has implemented the Payments NZ Account Information API v2.1 standards
Relationship Charter Survey finds strong relationships between RBNZ and firms
FSF Conference 2024 is on 22 October
Two KiwiSaver schemes – Sharesies and Koura Wealth report larger losses but make revenue gains