New Zealand: Review of life insurers to extend regulatory reach
Source: Asia Insurance Review | Mar 2019
The implications of the review of the insurance sector’s culture and conduct by the Financial Markets Authority and the Reserve Bank of New Zealand should not be underestimated, according to the law firm Chapman Tripp. There are plainly risks that the changes imposed will add significant compliance cost and will impact on existing modes of doing business, it adds.
The review of 16 New Zealand life insurers 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.
The government’s announcement that it will fast track legislative changes, including the introduction of a regulator to monitor the conduct of insurers, indicates that a more ‘hands-on’ approach will be taken. But the degree of regulation which is imposed will depend upon the government’s assessment of how much the industry can be relied upon to be self-regulating and to keep its own house in order, says Chapman Tripp.
In order to manage these risks, insurers will need to be able to demonstrate that effective strategies can quickly be put in place to address the report’s major criticisms. This will not prevent regulation but may temper the possibility of regulatory overreach. A