FSC publish Spotlights on Life Insurance and KiwiSaver

The Financial Services Council (FSC) have published their September 2024 spotlights on Life Insurance and KiwiSaver.

There are now 4.15 million life insurance covers, with $3.21 billion in annual life insurance premiums. The split is about 60% males and 30% females, and more than half of cover is for those aged 46 – 65.

KiwiSaver member contributions are slightly less than last year but funds under management have increased by 21.2% in the 12 months to 30 September, reaching $107.25 billion. Members are at an all-time high of 3,006,163.

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FMA announces more than $215 million returned to customers through remediation

The Financial Markets Authority (FMA) has released its annual report for the year ended 30 June 2024. One of the most interesting findings to come from the annual report was that $215 million has been returned, or is in the process of being returned, to customers as a result of remediation activity stemming from the Conduct and Culture review of banks and life insurers carried out by the Reserve Bank of New Zealand (RBNZ) and the FMA between 2018 and 2019. As at June 2024, 1.585 million affected customers had been identified. You can read about some of the filings from this year here.

The FMA achieved six out of nine of its Statement of Performance Expectations. Some key achievements included several penalty decisions for fair dealing provision breaches, opening licensing for the Conduct of Financial Institutions (CoFI) regime and producing the first Financial Advice Provider Monitoring Insights Report.

The FMA have also released the results of their Ease of Doing Business Survey which reports on stakeholder and industry participants views on the effectiveness of their interactions with the FMA.

• 94% agree financial markets are effectively regulated

• 85% agree the FMA supports market integrity

• 84% agree that FMA communications is relevant to their sector

• 75% agree the FMA helps raise the standards of market conduct

• 80% agree that communications help them understand the FMA’s approach to regulation

• 77% agree communications help them understand the FMA’s expectations of them

• 53% agree it’s easy doing business with the FMA

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Chubb launches underwriting chat service

Chubb has launched a new chat function on their adviser hub site that allows advisers to ask the underwriting team questions. Once the conversation is completed a chat transcript is able to be downloaded, for advisers to submit with the application or save to their customer files. You can find out more on their quick guide and their explainer video.

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Asteron Life release their climate-related disclosures

AIA have updated their Change of Ownership forms

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More than 7,500 people made early KiwiSaver withdrawals during September

Changes in QPR Database Upgrade 16.1

Changes in V16.1

 New product rated under Mortgage Protection (MPI)
> Partners Life - Household Expenses v19.1 effective 22 April 2024

 New documents added:

> Accuro SmartCare and SmartCare Plus June2024 (Policy document update only)

> Southern Cross Wellbeing1&2 Oct2024 (rating changes applied to exclusions)

> Chubb Life Biz&Personal 26 September 2024 (Personal rating changes applied to Child Trauma, Instant Buyback and update to trauma expiry age)

 Remediations Personal & Business:

> Medical
* Major review for non-pharmac which includes split into two items: 
- non-PHARMAC drugs (cancer specific) 
- non-PHARMAC drugs (non-cancer) 

 > Life cover

* Sub-item review for Conversion Option (renamed to Cover Conversion)
* Sub-item remediation for Terminal Illness (Asteron Life) and Upgrade Policy Wording

> Trauma

* Sub-item remediation for Permanent Loss of Hearing
* Sub-item remediation for Permanent Paralysis

> Specific Injury
* Sub-item remediation for Permanent Paralysis

> Income/Mortgage
* Sub-item remediation for Travel and Transport (Asteron Life)
* Sub-item remediation for Key Person and Business Expenses Partial Disability (Asteron Life)

* Update to income expiry age for 2 and 5 year benefit (Asteron Life)  

 FSR updates applied to:

* Asteron Life FSR updated from A+ to A

* Accuro FSR rating update from B to A

* SBS FSR rating update from BBB to BBB+

* Booster Assurance update to NR

Legal and regulatory update for the life and health insurance sector

29 Oct 2024 - Global privacy authorities, including the office of the Privacy Commissioner, have engaged with some of the world’s largest social media companies after issuing a joint statement on data scraping last year. As a result of this engagement, they have now issued a follow-up statement laying out additional takeaways for industry. This follow-up joint statement lays out further expectations, including that organisations:

• Comply with privacy and data protection laws when using personal information, including from their own platforms, to develop artificial intelligence (AI) large language models.

• Deploy a combination of safeguarding measures and regularly review and update them to keep pace with advances in scraping techniques and technologies.

• Ensure that permissible data scraping for commercial or socially beneficial purposes is done lawfully and in accordance with strict contractual terms. https://www.privacy.org.nz/publications/statements-media-releases/global-privacy-authorities-issue-follow-up-joint-statement-on-data-scraping-after-industry-engagement/

29 Oct 2024 - APRA has released its Life Insurance Claims and Disputes Statistics publication, covering a rolling 12-month period from 1 July 2023 to 30 June 2024. https://www.apra.gov.au/news-and-publications/apra-and-asic-publish-latest-data-on-life-insurance-claims-and-disputes-9

30 Oct 2024 - The FMA are consulting on renewal of class exemption for DIMS licensees from certain financial reporting requirements, consultation closes 29 November 2024. https://www.fma.govt.nz/business/focus-areas/consultation/consultation-renewal-of-class-exemption-for-dims-licensees-from-certain-financial-reporting-requirements/

30 Oct 2024 - ASIC has released findings from its financial reporting and audit surveillance for the 12 months to 30 June 2024, and announced a proactive surveillance focused on auditors’ compliance with independence and conflicts of interest requirements. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-240mr-asic-releases-fy-2023-24-financial-reporting-and-audit-report-and-launches-auditor-independence-surveillance/?altTemplate=betanewsroom

30 Oct 2024 - The FSC has published its KiwiSaver Industry Spotlight September 2024. https://blog.fsc.org.nz/kiwisaver-spotlight-september-2024

30 Oct 2024 - The Government is seeking public feedback on a proposed approved information sharing agreement (AISA) between Inland Revenue and the Ministry of Business, Innovation and Employment (MBIE). The AISA would allow Inland Revenue and MBIE to share prescribed information with the other agency for the benefits outlined in the discussion document. https://www.taxpolicy.ird.govt.nz/news/2024/consultation-information-sharing-ir-mbie-aisa

31 Oct 2024 - The FMA has decided to renew the Financial Markets Conduct (Disclosure of Relevant Interests by Directors and Senior Managers) Exemption Notice 2019, and the Financial Markets Conduct (NZCDC Settlement System) Exemption Notice 2019, for a further five years. They are working to finalise new notices to give effect to this decision, which they intend to have in place before the current notices are revoked on the close of 30 November 2024. https://www.fma.govt.nz/business/focus-areas/consultation/consultation-class-exemption-renewal-for-disclosure/

30 Oct 2024 - The FSC has published its Life Insurance Industry Spotlight September 2024. https://blog.fsc.org.nz/lifeinsurance-spotlight-september-2024

Insurance Pricing Reports

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Legal and regulatory update for the life and health insurance sector

24 Oct 2024 - The FMA published its annual report for the year to 30 June 2024. The report details the FMA’s core focus areas: monitoring and supervision of market participants, implementation of new legislation, enforcement action and providing resources for investors and consumers.  The FMA also released its annual ‘Ease of doing business’ report, which surveys stakeholders and industry participants to understand the effectiveness of their interactions with the FMA, and their views on FMA’s overall effectiveness in delivering its mandate. https://www.fma.govt.nz/news/all-releases/media-releases/fma-publishes-2024-annual-report/

25 Oct 2024 - APRA publish their opening statement to the House of Representatives Standing Committee on Economics - October 2024. https://www.apra.gov.au/news-and-publications/opening-statement-to-house-of-representatives-standing-committee-on-6

25 Oct 2024 - ASIC publish the opening statement by ASIC Chair Joe Longo at the House of Representatives Standing Committee on Economics. https://asic.gov.au/about-asic/news-centre/speeches/house-of-representatives-standing-committee-on-economics-opening-statement-25-october-2024/?altTemplate=betanewsroom

25 Oct 2024 - The Justice Select Committee have published their final report on the Privacy Amendment Bill. https://selectcommittees.parliament.nz/view/SelectCommitteeReport/5f2d852a-1aba-4b8b-2620-08dcf48e13aa

25 Oct 2024 - The Takeovers Panel offices will close from the end of the day on Monday, 23 December 2023, and reopen on Monday, 6 January 2024. https://www.takeovers.govt.nz/guidance/codeword/issue-57/panel-christmas-close-down-period

27 Oct 2024 - The FMA's annual report shows they turned in a more than $2.8 million surplus during the 12 months to June 30. The FMA reported revenue of almost $80.7 million while expenses hit a record high of $77.8 million.The FMA completed investigations into 1,118 ‘misconduct cases’, of which 993 were dealt with in the ‘compliant’ timeframe. https://investmentnews.co.nz/investment-news/fma-over-spends-books-surplus-on-legal-winnings/

29 Oct 2024 - APRA publish Deputy Chair Margaret Cole's speech to the AFR Super & Wealth Summit 2024. https://www.apra.gov.au/news-and-publications/apra-deputy-chair-margaret-cole-speech-to-afr-super-wealth-summit-2024

29 Oct 2024 - ASIC is urging financial services and credit licensees to ensure their governance practices keep pace with their accelerating adoption of artificial intelligence (AI). The call comes as ASIC’s first state of the market review of the use and adoption of AI by 23 licensees found there was potential for governance to lag AI adoption, despite current AI use being relatively cautious. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-238mr-asic-warns-governance-gap-could-emerge-in-first-report-on-ai-adoption-by-licensees/?altTemplate=betanewsroom

Partners Life release claims statistics

Some interesting statistics have been released by Partners Life around claims. Since Partners Life launched in 2011:

• Partners Life have paid out more than 70,000 claims worth more than $1.25 billion.

• Their biggest monthly disability claim paid was for $1,617,691

• The longest running claim paid for monthly disability cover was 4,068 days and the average claim length was 293 days

• Partners Life paid 13,379 monthly disability cover claims totalling $225,954,755

• Their biggest life cover claim paid was for $2,964,706

• Partners Life paid 1422 life cover claims totalling $334,281,111

• Partners Life paid 51,827 private medical cover claims totalling $353,468,683

• Their biggest private medical cover claim paid was for $982,800

• Partners Life paid 3,948 trauma cover claims totalling $357,357,574

• Their biggest trauma cover claim paid was for $3,218,899

For the year ended 31 March 2024, Partners Life

• paid 93% of claims

• paid $51,020,381 of monthly disability cover claims cost across 3,332 claims paid

• paid $61,130,350 of life cover claims across 208 claims paid

• paid $71,705,905 of private medical cover claims across 12,891 claims paid

• paid $66,106,600 of trauma cover claims across 655 claims paid

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Possible changes to probate threshold

The Ministry of Justice are currently consulting on a proposal to raise the threshold for distributing someone’s assets after death without the need for probate or letters of administration. The probate threshold of $15,000 (per asset) was last updated in 2009 and is set in the Administration (Prescribed Amounts) Regulations 2009. KiwiSaver was only in its infancy the last time the threshold was updated, and it has not been adjusted for inflation since.

The Ministry are seeking feedback on: how many payments are made without the need for probate; data on the average size of assets people hold when they die; how easy or difficult the current situation is to navigate when deciding whether to pay out; if there are any situations where account above $15,000 are unclaimed; what an appropriate new threshold would be.

Members of the FSC can contact the FSC if they want to contribute to the FSC’s submission.

More news:

Pinnacle Life introduces flagship life insurance product and updates its optional Trauma Cover – Critical Conditions Cover

Financial Advice NZ webinar 'Are you Cyber Savvy enough?' 13 November