Legal and regulatory update for the life and health insurance sector

13 Feb 2025 - The Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill was read a first time and referred to the Justice Committee. https://bills.parliament.nz/v/6/81644768-3902-4253-9723-08DD1EDF8E71?Tab=history

13 Feb 2025 - Professor Philip Vermeulen has been appointed to the RBNZ's governing Board. Philip will serve for a five-year term, from 10 February 2025 to 31 January 2030.  https://www.rbnz.govt.nz/hub/news/2025/02/phillip-vermeulen-appointed-to-board

18 Feb 2025 - ASIC is proposing additional relief to further assist Australian financial services and credit licensees comply with the reportable situations regime. ASIC’s proposed additional relief aims to reduce the reporting burden on industry while still ensuring that ASIC receives reports of high regulatory value. They are inviting feedback on the proposal to give relief from reporting certain breaches of the misleading and deceptive conduct provisions, and certain contraventions of civil penalties where:

• the breach has been rectified within 30 days from when it first occurred (this includes paying any necessary remediation), and

• the number of impacted consumers is not more than five, and

• the total financial loss or damage to all impacted consumers resulting from the breach is not more than $500 (including where the loss has been remediated), and

• the breach is not a contravention of the client money reporting rules, and clearing and settlement rules.

https://asic.gov.au/about-asic/news-centre/news-items/asic-proposes-further-relief-for-licensees-under-the-reportable-situations-regime/

18 Feb 2025 - The Privacy Amendment Bill was read a second time. https://bills.parliament.nz/v/6/56e3fbe7-1f3d-464e-b54d-08dbae8917ae

Partners Life to release Quote for Alteration Phase 2

Partners Life new upgrade to their Quote for Alteration (QFA) digital tool is coming soon. There’s a handy tutorial here. The upgrade will provide a fully digital process, where advisers can apply for increases and alterations for existing clients in the same way they do for new clients within QFA. QFA applications will be available on Partners Protection Plan and Business Protection Plan policies; Funeral Plan, Essential, Heritage and Loancare policies cannot be serviced online through QFA.

More news:

AIA extend their 3 months' insurance free offer until 31 March 2025

AIA are introducing digital arrears notifications

AIA increases pricing for some Trauma products

AIA introduce SovLink microlearning

Fidelity Life simplify underwriting process

Partners Life paid out 93% of claims in the year ending March 31, 2024

Government commissions two independent reviews to improve the performance and sustainability of ACC

Chubb Life NZ appoints new Head of Claims

Chubb Life NZ has announced that Reeta Anthony has been appointed as its new Head of Claims, effective immediately. Anthony will report to Debbie Eyre, Chief Operating Officer, and will be responsible for the strategic delivery of the claims proposition. Anthony has over 25 years of financial services experience and expertise and was most recently Head of Claims at Fidelity Life.

More news:

Good Returns lays out implications and exceptions to the new Law that bans target-based incentives for Financial Advisers

Financial Advice NZ webinar 'Product, policy, and pitfalls - access to cover for non-Pharmac drugs.' 12 March

Kate Jorgensen has been appointed to the Board of Southern Cross Medical Care Society.

ASB's NPAT for the six months to December 2024 was $763 million

Review finds KiwiSaver HomeStart scheme has coincided with an increase in house prices and a decline in homeownership

Pharmac announces decision to fund medicines for a further five health conditions

Latest Health / Medical Insurance Pricing Database upgrade

The latest rates for nib have been live on Quotemonster since their implementation on 1 February, however, we have now updated the institutional price comparison database. version 115, distributed last Thursday. Please contact us if you would like a demonstration of this product.

Website and research upgrades: what you need to know – website version v4.6.6 / QPR v16.4

Our team have made some monstrously good updates to Quotemonster recently. If you’ve noticed we’re running a bit slower than usual, please refresh your page and scroll down to ensure that you’re on our latest version – QUOTE ENGINE V.3.0 B1 | QPR V.16.4 | WEB V4.6.6.   

Researchmonster updates:

- Pricing and research available for SBS Home Loan Repayment Cover  

SBS Insurance launched a new mortgage protection product on 1 February 2025.
To include the company in your price and research comparisons, simply ensure they are selected in your Product and Provider Settings.

- Upgrade to Multi Trauma Functionality 

We have made an update to how Fidelity’s Multi Trauma product is quoted, and this is a direct result of adviser feedback. When Instant Trauma Buyback is selected, Fidelity Life’s Multi Trauma product will now automatically be quoted in your comparison, alongside the following products:

Asteron Life and Chubb Life’s Continuous Trauma, and Partners Life Immediate Buyback.   

- Minor review of the following items:

Trauma - minor sub-item review for Inflation Adjusted Benefit (personal) and Life Cover Buyback (personal & business)

TPD - minor sub-item review for Counselling & Support (personal & business)

Income and Mortgage Protection - sub-item review for Reduction in Wait Period (personal)

Other noteworthy updates:

- Updated terms and conditions pop-up

We’ve updated our Terms of Use and Privacy Policy to keep things fresh, legal, and slightly more interesting than watching paint dry.

What's changed? Some boring but important updates about Kiwimonster, data protection and slick new tools like API’s—because the future is coming, and our policies need to keep up!

Before you start crunching, please read our new terms and click Agree and Continue. Once accepted, you won’t see the pop-up again. However, if you’re in front of a client we will allow you to skip once, but you’ll need to agree the next time around or you will no longer be able to login.

This will appear on all logins including PA logins the next time each user tries to log in.

- Recent rate changes

- nib Ultimate Health and Ultimate Health Max effective 1 February

- Chubb Life & Living rates have been added into our Estimates section

- Kiwimonster is live

Our free KiwiSaver comparison tool, Kiwimonster is now live. We have collaborated with Morningstar and Investment News New Zealand to help deliver fund and fee comparisons to help elevate your KiwiSaver advice process. Research is coming soon…

If you’re an existing user, all you need to do is log in to your Quotemonster account and click on the Kiwimonster logo on the top left.

If you’re a new user, please head over to www.kiwimonster.co.nz and click the orange sign up button on the top right to have access to this new feature.

Join now with a free trial and you can also check out the research and advice services available with a subscription.

- Updated research infographics

Research on previous policy document versions (if applicable) can be found in our Standalone Head to Head.

The following infographics have also been updated:

·        Personal Product Rating Map

·        Standalone Head to Head Product Map

Training sessions:

Our team hosts online training sessions on a regular basis and invites you and your colleagues to join us if you’re interested in learning more about our services.  

Our next sessions will be: 

Introduction to Quotemonster – Tuesday, 18 February 2025 9:30 am-10:30 am

In this session Kelly Pulham, our National Partnerships Lead, will demonstrate the basic functions of our website, along with some handy tips and tricks along the way.

Demystifying Advicemonster - Tuesday, 18 February 2025 11:00 am-12:00 pm

In this session Aneel Ravji, our AdviceTech Lead, will demonstrate how to use our needs analysis and statement of advice (SOA) tools.

Business Risk Research and SOAs with Quotemonster – Wednesday, 19 February 2025 10:30 am-11:15 am

In this session, Aneel will demonstrate how to use our business risk pricing, research, and SOA functionality.

Introduction to Kiwimonster - Monday, 24 February 2025 11:30 am-11:50 am

A session on our brand spanking new service – Kiwimonster.

If you would like to join any of these sessions, please email your request to info@quotemonster.co.nz

Happy Crunching!

Super Early Bird tickets to the FSC 2025 Conference available now

The Financial Services Council (FSC) is holding their 2025 conference on 10 & 11 September at the Cordis Hotel in Auckland. While details of the speakers and sessions are still to be released, the FSC has said that FSC25 Conference: Transforming for Tomorrow “…aims to inspire attendees to move beyond the present and envision a future where financial services not only meet immediate needs but also anticipate and address challenges for generations to come.”

Super Early Bird tickets are on sale now, which includes the FSC Awards Dinner.

More news:

Nicola Willis will deliver a keynote address at National Adviser Conference

Jon-Paul Hale questions whether we should commoditise life insurance

The gender pay gap is a key focus of the FSC's Empower Women workplan

Survey finds kiwis have experienced a decline in their overall satisfaction of their quality of life

KiwiSaver providers show interest in idea of channelling hardship applications to a centralised point of contact

Insurtech and Insurance Law Reform - Impacts and Innovation Opportunities

Below is a high-level overview of the impacts and innovation opportunities arising from the Insurance Contracts Act changes. We prepared this overview as part of our participation in an excellent Insurtech event, held last night at the Partners Life offices in Takapuna. The Insurtech community got to talk about how changes to insurance law will affect the insurance industry.

My fellow panellists were Charlotte Cockrell, Head of Legal, Remediation & Company Secretary, Fidelity Life; Jon Davies, CEO, InsuredHQ; Levonne Bell, GM of Underwriting and New Business, Partners Life. There was an excellent introductory presentation on the changes to the legal framework by Mark Banicevich, Industry Engagement Manager, Partners Life, too.

Grateful thanks to Paul O’Leary and Rob Ellis and the Insurtech team, as well as our hosts Partners Life for enabling the event.

Insurance Law Reform – Impacts and Opportunities for Innovation

Prepared by: Russell Hutchinson, Director, Quality Product Research Limited - 4 February 2024 – and staff.

Introduction

The Contracts of Insurance Act 2024 represents a significant overhaul of New Zealand's insurance contract law. The impacts will be felt in systems processes and documents. At Quality Product Research Limited we review those things all the time for hundreds of on-sale and legacy policies with our team of five researchers. Below is a summary of the key changes introduced by the Act, with our comments. In commentary we aim to highlight areas where insurers may have more work to do, and what that may entail. There is an impact, and usually, an opportunity for innovation in most of these areas. InsurTechNZ members can probably think of more, but this, we feel is a good place to start. 

• Redefined Disclosure Duties:

• Consumer Insurance Contracts: Policyholders are now required to "take reasonable care not to make a misrepresentation" when entering into or varying a contract. This shifts the onus onto insurers to ask clear and specific questions. What constitutes ‘clear and specific’ is not yet defined. Experience from the UK following similar law and regulation suggest that long compound questions, catch-all questions, and questions unlimited by time are unlikely to meet requirements. ensuring that consumers understand their disclosure obligations.

• Non-Consumer Insurance Contracts: Policyholders must make a "fair presentation of the risk," disclosing all material circumstances they know or ought to know. This ensures that insurers receive sufficient information to assess the risk accurately.

• Impacts - all insurers will need to review application questions, including initial applications, supplementary questions, and probably some aspects of offers of terms. The changes are probably more significant for those insurers who offered short-form underwriting. These questionnaires often had complex compound questions and a catch-all question which may not meet the requirements of the new law. This means the impacts are probably greater for direct and bank insurance offers than for fully-underwritten offers normally distributed through advisers.

• Innovation: there is substantial opportunity for innovation in this step in the advice process and insurer’s underwriting processes. The aim should be to not just match legal and regulatory requirements with updated systems questions but push further into new methods for underwriting that bring process reengineering benefits not just mere compliance.

• Proportionate Remedies for Non-Disclosure:

• The Act introduces proportionate remedies based on the nature of the policyholder's non-disclosure or misrepresentation:

• Deliberate or Reckless Misrepresentation: Insurers can avoid the contract but must return the premium.

• Unintentional Misrepresentation: Remedies are based on what the insurer would have done if aware of the true facts, such as adjusting the terms or premium.

• Impacts: it depends on the current claims processes of the insurer. Most of the insurers I deal with regularly, and that goes for advisers too, will not have to make radical changes to claims processes. Again, this is more likely to affect insurers who underwrite less upfront.

• Implied Term for Timely Claim Payments:

• Insurers are now obligated to pay any sums due in respect of a claim within a "reasonable time." What constitutes a reasonable time will depend on factors like the complexity of the claim and any external factors beyond the insurer's control.

• Impact: most insurers do not aim to stretch out claim payment processes. Some claims, however, do take time to process. That can be because of a lack of required information. Clearly, expediting that is now more of a priority.

• Innovation: death claims are ripe for automation. We have good public registers of deaths and these could be searched and analysed to enable claim payments with little human intervention. Some trauma and IP claims could be automated as well if better access to health and ACC databases were available. Currently access to these is limited and does not enable automation. However, if government is serious about enabling innovation, adding doctors, pharmacies, specialists, the Ministry of Health, and ACC to its planned targets for a consumer data right would be a great step!

• Plain Language Requirements:

• Insurance contracts must be written and presented in a clear, concise, and effective manner. This aims to enhance consumer understanding and allows for better comparison between insurance products.

• Impact: special hat tip to Mark Banicevich who pointed out that these terms are in the associated law the Contracts of Insurance (Repeals and Amendments) Act 2024. There will be endless debate about what represents ‘clear, concise, and effective.’ Not all of those terms work in concert – clarity sometimes requires more words than would be desirably concise. We feel that a few documents that currently have some degree of recognition for their ‘readability’ are in fact poor. On average, documents in the sector are difficult for consumers to navigate. They are typically multi-part documents, which makes finding all the relevant terms hard. Some documents are gigantic because they contain wording for every possible benefit irrespective of what the insured purchased. Almost all require the learning of specific terms.

• Innovation: we think it likely that the requirement to be concise means giant omnibus documents are a thing of the past. One test for readability measures whether something is comprehensible when text is removed. Obviously huge sections of text can be removed from omnibus documents. Another clear opportunity, already used by one insurer is personalisation – something modern systems can easily handle – examples being, instead of ‘insured’ use the person’s name, instead of sum insured insert the dollar amount of the sum insured, and so on. These days the document can continue to be updated as these change.

• Direct Rights for Third Parties:

• The Act allows third parties who are owed an insured liability by a policyholder to bring a claim directly against the insurer, subject to court approval. This modernises the previous statutory charge mechanism, providing greater clarity and efficiency.

• Impact: being able to lodge a claim for some of the proceeds of claim probably helps create some clarity. However, claims processes may have to be addressed to ensure a check is made.

• Innovation: this aspect may lean against claim automation in some cases.

• Consolidation of Insurance Legislation:

• The Act repeals and amends multiple existing statutes, including the Insurance Law Reform Acts of 1977 and 1985, consolidating them into a single, more accessible piece of legislation.

• Impact: modernisation.

• Unfair Contract Terms Provisions:

• Scope and Application: - these provisions apply to all consumer insurance contracts—those taken out for personal, domestic, or household purposes. Terms in insurance contracts are assessed for fairness, particularly those not individually negotiated.

• Criteria for Unfairness: - A term is considered unfair if it causes a significant imbalance in the parties’ rights and obligations under the contract, to the detriment of the consumer. Factors considered include the transparency of the term and whether it is necessary to protect the insurer's legitimate interests, which means there are some excluded terms, which are, broadly: terms that define the main subject matter of the contract (like the insured risk) and those setting the price, provided they’re presented in plain language, are not subject to this unfairness assessment. The Court can declare a term unfair and, consequently, void. However, the rest of the contract continues to operate as long as it’s capable of doing so without the unfair term.

• Examples of Unfair Terms (from the Act’s Guidance): - terms that allow the insurer to unilaterally vary the contract without a valid reason; terms that disproportionately limit the insurer’s liability or the consumer’s rights to claim; terms that bind the consumer to terms they had no opportunity to read before the contract was made (hidden terms).

• Consumer Empowerment: - policyholders are encouraged to challenge terms they perceive as unfair, knowing there’s a legal framework supporting their concerns. This empowerment aims to foster a more competitive market where insurers are incentivized to maintain fair and transparent practices.

• Impact: At Quality Product Research we are very interested in fairness concepts and have been researching and comparing contract terms (usually in definitions) for over 20 years. Insurers will need to review wordings, especially in standard-form contracts, to ensure they meet the fairness criteria. There’s a push towards greater transparency and simplification in policy documents, with a focus on eliminating “legalese” that could obscure unfair terms. The impact of this change creates risk. While pricing is defined as a core term the question of how premium reviews is done, for example, may not be so protected. That risk needs to be examined in some more detail. It is not the only area where a particular type of fairness – procedural fairness – needs to be examined. We are working with Nick Kirwan to develop more tools to review procedural fairness, as well as developing our ratings based on some key aspects of policy wording disclosure.

• Product design: there are wider design implications:

o   Taken individually there may be impacts and necessary actions to comply and innovation opportunities. Taken collectively the new laws may push product development in some specific directions, especially when considered alongside the need to develop products which are much more efficient.

o   Terms clarity, underwriting clarity, and claims clarity, plus requirements for speedy settlement suggest claim automation. Claim automation tends to favour explicitly stated sums insured triggered by verifiable events – what is sometimes referred to as parametric insurance in contrast to a historical bias towards the principle of indemnity. Indemnification often requires more involved verification procedures, which are slow and subject to more judgment calls. There is an efficiency tradeoff in the claim between these different types of cover, but it may be worth it for the gains from automation.

We welcome discussions about the impact and opportunities of these laws and look forward to hearing from you with your thoughts. Do contact either me or any of the team by visiting www.quotemonster.co.nz

For further information, you may refer to the following resources:

• Hesketh Henry's overview: heskethhenry.co.nz

• Anderson Lloyd's summary: al.nz

• Dentons Kensington Swan's insights: dentons.co.nz

Legal and regulatory update for the life and health insurance sector

5 Feb 2025 - The FMA publish Jess Learns to Invest Episode 1 - Investing 101 with Simran Kaur. https://www.fma.govt.nz/library/podcast/jess-learns-to-invest-1/

11 Feb 2025 - The FSC has published its Life Insurance Industry Spotlight December 2024. https://blog.fsc.org.nz/kiwisaver-spotlight-december-2024

12 Feb 2025 - The FMA is holding a webinar 'The changing landscape of investment scams in New Zealand' on 19 February 2 - 3pm. https://forms.office.com/pages/responsepage.aspx?id=DBuDvYE37ECAHl37ombezyQqRiaQuB9NnrA0reO0FFNUQ1FMUjc3RTNJVUFMNUpBOTkwOFZLSDlLVy4u&route=shorturl

12 Feb 2025 - The FMA has clarified the licensing requirements for e-money and payment service providers in New Zealand. There is no specific licence for e-money institutions or payments service providers in New Zealand. Instead, providers will have a range of obligations under New Zealand’s financial services regulatory regime, either through the Financial Markets Conduct Act, or the Non-bank Deposit Takers Act. The level of regulation will largely depend on whether providers are issuing debt securities as part of their service offering.  https://www.fma.govt.nz/library/opinion/fma-provides-clarity-to-e-moneypayment-services-providers-on-licensing-requirements/

12 Feb 2025 - ASIC has published their Financial advice update - February 2025. https://asic.gov.au/about-asic/news-centre/news-items/financial-advice-update-february-2025/

13 Feb 2025 - The XRB has published a Greenhouse Gas (GHG) Assurance Report Explainer to help users navigate GHG assurance reports, which will soon accompany the climate statements of climate reporting entities.  https://www.xrb.govt.nz/dmsdocument/5371/

13Feb 2025 - The XRB are seeking input to a submission to the International Public Sector Accounting Standards Board (IPSASB) in response to its exposure draft of a global public sector climate-related disclosure standard. https://www.xrb.govt.nz/consultations/climate/

Report delves into implications for insurers from emerging medical trends

Munich Re’s latest Life Science Report delves into the emerging medical trends and risks and implications for life and health insurers. The report is split into five sections which analyses different topics: Artificial Intelligence in Healthcare (released); Improving Cancer Outcomes (released); Prevention (releasing 18 February); Obesity (releasing 4 March); and Climate Change (releasing 18 March).

Insurance Business Mag ran an article where Dr. Brad Heltemes, VP & medical director of R&D at Munich Re, discusses the Improving Cancer Outcomes chapter. In particular, Heltemes highlights how identification of various gene alterations the drive the development of a cancer can be significantly different between two cancers that appear to be alike in location and appearance, giving as one example “…the multiple different gene signatures seen with non-small cell lung cancers, each which responds to a different targeted treatment and each having a different prognosis.”

New diagnostic tests and innovative treatments are also leading to improving cancer outcomes, with many cancers that used to be terminal now being able to be managed as chronic diseases. With patients leading longer, healthier lives (which is great news!), longevity models and expected treatment costs need to be re-examined.

More news:

The unemployment rate reached 5.1% in the December 2024 quarter

New Zealand Society of Actuaries suggests retirement savings targets could be overstated

KiwiSaver funds under management reached $121 billion in the December 2024 quarter

EY release global insurance outlook for 2025

EY have released their global insurance outlook for 2025. One of they key takeaways for life and health insurers is the growing global retirement savings gap. Longer lifespans and aging populations are set to increase the gap from US$106 trillion in 2022 to US$483 trillion in 2025, with EY predicting increased demand for financial estate planning services, life insurance, health insurance and wellness programmes.

AI is shifting business practices globally, with 99% of insurers already investing in GenAI or making plans to invest. EY posit that as data and tech become so much more important, they must be baked into front line operations and decision-making processes. More than half of workers believe GenAI will positively impact their productivity and ability to do high-value work. EY highlight the importance of having staff with AI skills and fostering a culture of innovation and adaptability to drive productivity gains and increase employee engagement.

EY predict a rise in personalised offerings, driven in part by advances in AI helping with tailored messaging, targeted recommendations, more accurate pricing and faster underwriting. EY suggest that product innovation will prioritise features (such as preventative services) that drive outcomes customers desire (e.g. healthier lifestyles), a la AIA’s vitality programme. They also highlight that importance of partnerships and new channels to gain access to new customer segments.

More stories:

Curated Risk merges with Long Burroughs Limited

New Zealand Home Loans appoints Michelle Vaughan as Insurance Lead

Asteron Life ratings updated after sale to Resolution Life

Nick Hakes talks about Financial Advice NZ’s annual conference

mySolutions webinar 'An app solution for your FAP ' 19 February

The household living-costs price indexes increased 3.0% in the 12 months to December 2024