Legal and regulatory update for the life and health insurance sector

23 Mar 2025 - The FMA now publishes monthly market engagement undertaken by the FMA on their website. https://www.fma.govt.nz/business/

25 Mar 2025 - New research commissioned by the RBNZ has highlighted barriers that can prevent some New Zealanders from opening bank accounts. The research, titled First steps to financial inclusion, explored opening bank accounts from the perspective of frontline bank staff and customers. It found that certain groups were reported to be most likely to find it difficult to open a bank account, including recent migrants, rural communities, the elderly, people with disabilities, and trusts (including Māori trusts). https://www.rbnz.govt.nz/hub/news/2025/03/new-report-suggests-that-collective-action-is-needed-to-improve-access-to-bank-accounts

25 Mar 2025 - Customer and Product Data Bill completes third reading. https://bills.parliament.nz/v/6/770A5F4E-2185-4F1F-1395-08DC75512299?Tab=history

26 Mar 2025 - The FMA are consulting on a range of class exemption that are due to expire before the end of 2026.  https://www.fma.govt.nz/business/focus-areas/consultation/expiring-class-legislative-notices/

27 Mar 2025 - The committee stage of the Privacy Amendment Bill was completed. https://bills.parliament.nz/v/6/56e3fbe7-1f3d-464e-b54d-08dbae8917ae?Tab=history

27 Mar 2025 - The Chief Ombudsman Peter Boshier has released his final report to Parliament. https://www.ombudsman.parliament.nz/news

AI becoming more trusted by executives

SAP investigated how US executives were using AI in their organisations and their trust in the technology. They found that AI has become embedded in work practices (with 63% of executives using generative AI daily) and is changing how people do business.

Decisions are being made based on AI insights, with 44% of C-suite executives saying they would override a decision they had already planned to make based on AI insights and another 38% trusting AI to make business decisions on their behalf. 74% of executives had more confidence in AI advice over advice from family and friends. And a massive 55% of executives say in their company AI-driven insights have replaced or bypassed traditional decision-making.

Some common tasks carried out by generative AI tools include:

• Analysing data and making recommendations for decision-making (52%)

• Spotting risk or issues they hadn't previously considered (48%)

• Offering alternate plans (47%)

• Enhancing product development (40%)

• Supporting budget planning (40%)

• Performing market research (40%)

SAP found that there were positive implications on employee wellbeing, with 39% of executives reporting better work-life balance, 38% reporting improved wellbeing and 31% reporting reduced stress.

More news:

SortMe Advisor Portal, a tool designed to enhance financial advisory services, launches

AIA launch new Guide to Medical Underwriting

28% of large organisations rank AI-generated cyber threats as a major risk

Outgoing Chief Ombudsman identifies significant concerns with Health NZ’s delays and administrative processes around OIA requests

Munich Re delve into AI’s impact on Healthcare

As part of Munich Re’s Life Science Report, they have investigated the projected impact of Artificial Intelligence (AI) on healthcare, from disease prevention to diagnosis to treatment as well as the implications for efficiency gains.

While the news is mostly good (improved mortality, better prevention, earlier diagnoses, individualised therapies), it does create some challenges for life and health insurers. With earlier diagnoses and the emergence of new disease classifications, critical illness insurance products will need continuous updating. Claims management and policy development will become more complex, as genetic and molecular diagnosis becomes more routine, requiring a higher level of medical expertise. Overdiagnosis (the detection of diseases that don’t impact on mortality and/or morbidity) and antiselection may become problematic.

AI will also create opportunities for insurers. Insights from accessing and analysing vast datasets including electronic health records, imaging and other biomedical sources will transform the understanding of the root causes of disease and in turn allow underwriting to become more accurate and sophisticated. Wellness interventions will be able to be better targeted and increase in scope and effectiveness.

More news:

Profile of Josh Bronkhorst, CEO of Link Financial Group

Entries for Insurance Business’ annual Top Insurance Employers close 14 March

InvestNow’s Retirement Readiness Index recorded an average confidence level of 50.4%

Kiwibank reports NPAT of $92 million for the six months ending 31 December 2024

New framework moves beyond traditional reliance on BMI as a sole indicator of obesity

GlobalData projects the life insurance market in New Zealand will grow

GlobalData, an international data and analytics company, has projected the New Zealand life insurance market to grow from $5.9 billion in 2024 to $8.3 billion in 2029, equating to a compound annual growth rate of 7.0%, in terms of gross written premium. It expects the New Zealand life insurance market will reach $6.4 billion in gross written premiums in 2025.

The largest driver of growth is expected to be life personal accident and health, with an expected compound annual growth rate of 6.9% between 2025 and 2029 driven by rising healthcare expenditure and corresponding premium increases.

GlobalData puts the increased demand down to factors including an aging population, heightened health awareness and the rising cost of living, which have increased the need for financial protection, though they caveat their projections, saying high unemployment and inflation could pose risks to this growth.

More news:

Applications for Fidelity Life’s Career Connect 2025 intake are open

The ‘Get AIA Vitality and Start Thriving’ brand campaign is back

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

How much do you need to save for retirement?

There are many differences in opinion in how much people need to save. Here is a run through some excellent current resources:

This article calculates that if you want a ‘choices’ lifestyle (income of $60,000 - $87,000 a year) you’ll need to have between $890,000 and $1,360,000 saved depending on if you are a single person or a couple. If you want a well-off lifestyle (income of $100,000) a year, you’ll need to have saved somewhere between $1,929,000 and $2,640,000.

Some advisers like to exclude ‘lifestyle assets’ such as a mortgage-free home, caravan and boat from calculations, basing retirement calculations solely on cash and liquid investments. Other people may have downsizing to a smaller home to release some equity as a key part of their retirement strategy.

Retirement Commissioner Jane Wrightson advocates for people to start saving for their retirement as early as possible

“How much you need to save will depend on your own circumstances, but the sooner you start, the better the position you’ll be in when you stop working.”

Mercer Financial Advice launched a retirement income simulator late this year. If you haven’t already checked it out, we recommend you do. This is quite a comprehensive calculator that lets you estimate your projected retirement savings and how long it may last in retirement. What I particularly like about this tool is it lets you factor in the impact of a career break or move to part-time work, something a lot of parents decide to do at some point. It shows you the results in today’s dollars (having deflated the projected dollar amounts based on the rate of wage inflation of 3.2%).

Sorted also have their retirement calculator you can check out. Simply add your current age, the age you’d like to retire, whether you’re planning on your own or with a partner (and their current and retirement ages), whether you want to live in a main centre or the regions, whether you want a no frills, choices or custom weekly allowance, plus your expected KiwiSaver balances at retirement and any other savings, investments, inheritances, sales of a business or other income. You can also choose to include or exclude NZ Super, depending on whether you think it will still be around by the time you retire.

A useful guide for planning how to spend your savings nest egg when it comes time to retire is The New Zealand Society of Actuaries’ Drawdown Rules of Thumb. It sets out different strategies you may like to use depending on your priorities and risk level, whether you intend to leave an inheritance or whether you want to front-load your spending. They have also published Spending patterns through retirement: implications for retirement planning and drawdown which urges those planning for or managing income in retirement to consider how spending patterns can be expected to change throughout the duration of retirement. Their analysis suggests a typical scenario for New Zealand retirees is that real spending reduces by around 2% a year, which would significantly reduce the amount needed to be saved compared to commonly used benchmarks that assume spending stays level in real terms. Though it’s important to note that the data doesn’t show whether the lower spending is because people become less active during retirement and choose not to do things or become constrained by their resources and must give up such options.

All these reports could be used to build a sound basis for the KiwiSaver and wider Superannuation planning services you may offer.

As always, when it comes to something as important and complex as your retirement savings, if you are reading this and you are not a financial adviser, we encourage you to speak to an adviser about your retirement – and while you are at it, your life and health insurance too.

But you probably are a financial adviser, in which case – why not check out Kiwimonster? Our new, free, data service for advisers to help support your KiwiSaver advice process. You can find it at www.kiwimonster.co.nz

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

Deepfake scams on the rise

Research commissioned by MasterCard has found that 29% of New Zealanders and 18% of NZ businesses have been targeted by deepfake scams in the past year. Deepfake scams use generative artificial intelligence (AI) to impersonate individuals, with the aim of stealing their targets’ money or personal information.

Deepfakes scams can utilise video, images and audio and can look increasingly convincing. Confidence levels in the ability to correctly identify deepfakes are low, with only 12% of respondents confident they would be able to detect a deepfake scam. Deepfakes are eroding trust in public figures and digital platforms, with 41% of individuals being more sceptical towards celebrities and influencers; 61% of kiwis being less trusting of social media platforms; 40% of New Zealanders being less trusting of emails and 37% of respondents being less trusting of phone calls compared to the previous year.

Some steps businesses are taking to address these risks include employing identification verification for accessing sensitive information, offering cybersecurity training and conducting training on financial transactions.

More news:

mySolutions webinar 'How non-PHARMAC drugs are covered in our Private Medical offering' 23 October

Chubb’s Underwriting Click to Chat function is live on Adviser Hub

AIA health premiums increasing from 1 November

AIA release latest version of Underwriting Guide

Link Financial Group appoints Luke Roberts and Quentin Holmes as national growth managers

Tony Vidler talks about the importance of focusing on existing client base

Southern Cross Health Society Group annual results released

Southern Medical Care Society Group has shared their annual results for the year ended 30 June 2024. By the numbers:

• Group deficit of $88.2 million after tax. $43.1 million of the deficit is attributable to a change in international financial reporting standards introduced this financial year. The balance of the deficit is driven by higher claims costs from a high inflationary environment combined with high member demand for private health services, particularly in the second half of the financial year.

• Group reserves of $470.7 million.

• Claims paid at a rate of $6 million per business day (up from $5.2 million in FY23).

• 15,196 net new members, with total membership now at 955,301.

• This represents 60% of the New Zealand health insurance market by customer numbers but 71% per cent of the value of all health insurance claims paid.

• 99% of claims were submitted electronically.

Southern Cross Health Insurance

• Reported a deficit of $99.1 million.

• Paid $1.498 billion in claims from $1.605 billion received in premiums.

• Claims costs increased 15% on FY23 (up 13.9% when adjusted for member growth).

• Premiums increased 9% on FY23 (up 6.6% when adjusted for member growth).

• 93.4 cents paid in claims from every dollar received in premiums (compared to an industry average excluding Southern Cross) of 73 cents.

• Operating costs grew by 4%, less than inflation.

• 3.2 million claims in FY24

• 50% of members claimed over the financial year.

• 39,326 virtual GP consultations with Care HQ.

• 4,635 annual health check-ups with MedPro.

• 4,016 online mental health sessions with Raise.

• Net promoter score of 53.7%.

 Nick Astwick, Chief Executive for Southern Cross Health Society said

“We have never been in more demand by our members as they prioritise their health needs, largely in the private system. In 2019 33% of our membership claimed, last year it was 50%.”

“The cost of claims in 2024 was steep and rapid, driven by a combination of price, volume, and the mix of claims. The growth in the volume of claims results from an increase in the number of members claiming, the frequency, and claims being made for more expensive procedures.”

More news:

Asteron Life announce MDRT Grant Programme recipients

NZFSG named as one of the Most Innovative Insurance Companies

Fidelity Life working to implement a data governance strategy

ANZ add BlinkPay to their approved third party payment providers

2024 Haven award winners announced

Committee recommended changes to the Contracts of Insurance Bill

Travis Hamilton says Total and permanent disability (TPD) cover is being underestimated

Jon-Paul Hale suggests ways insurers can improve systems for advisers

Tony Vidler recommends how advisers can value themselves appropriately

The Government has completed a cost-benefit analysis for potential third medical school

Wayne Langford appointed to the Board of the Mental Health and Wellbeing Commission

Legal and regulatory update for the life and health insurance sector

29 Aug 2024 - MBIE are seeking feedback on how the Customer and Product Data Bill will apply to the banking and electricity sectors. Consultation on their discussion paper 'open banking regulations and standards under the customer and product data bill' is due by 10 October 2024. https://www.mbie.govt.nz/have-your-say/exploring-a-consumer-data-right-for-the-banking-sector

30 Aug 2024 - The Council of Financial Regulators (CoFR) release their Quarterly Statement for August 2024. https://www.cofr.govt.nz/news-and-publications/quarterly-statement-by-cofr-august-2024.html

3 Sep 2024 - The Financial Markets Authority has filed criminal charges against a former financial adviser. The defendant, who has interim name suppression, has pleaded not guilty to two representative charges of theft by a person in a special relationship. The FMA alleges that the defendant procured approximately $1.7 million from two sets of clients on the basis that he would invest the funds procured on their behalf. It is alleged the defendant instead used the funds obtained for personal purposes. The alleged offending occurred between 2016 and 2022.  https://www.fma.govt.nz/news/all-releases/media-releases/fma-files-criminal-charges-against-former-financial-adviser/

4 Sep 2024 - The FMA publish Samantha Barrass' speech from the Financial Services Council 2024 Conference. https://www.fma.govt.nz/library/speeches-and-presentations/financial-services-council-conference-2024/

4 Sep 2024 - The Financial Markets Authority has cancelled Integrity Advisers Insurance Limited’s (Integrity) Financial Advice Provider (FAP) licence for engaging in serious misconduct.
Integrity is a Christchurch-based financial service provider that held a full FAP licence, providing financial advice to approximately 500 retail customer.
Following an investigation, the FMA found that Integrity breached its market services licensee obligations by failing to:
• give priority to client’s interests
• comply with the Code of Professional Conduct for Financial Advice Services
• treat customers fairly
• act with integrity. 
The breaches relate to Integrity’s treatment of clients who wanted to cancel their respective insurance policy between September 2022 and June 2023 (affected clients).  

https://www.fma.govt.nz/news/all-releases/media-releases/fma-cancels-integrity-licence/

5 Sep 2024 - Concerns about inconsistent application and insufficient disclosures of climate-related matters in financial statements has led the International Accounting Standards Board (IASB), in collaboration with the International Sustainability Standards Board (ISSB), to develop an Exposure Draft outlining eight illustrative examples.  https://www.xrb.govt.nz/consultations/accounting-standards-open-for-consultation/reporting-climate-related-and-other-uncertainties-in-financial-statements/

5 Sep 2024 - The Reserve Bank of New Zealand publish Christian Hawkesby's speech at the FSC24 Conference. https://www.rbnz.govt.nz/hub/publications/speech/2024/resilience-as-a-pathway-to-prosperity