Life insurance under commission's gaze
A new Insurance Contracts Act, abolition of the Life Insurance Act, and putting life insurers on the same regulatory footing as other financial intermediaries are all recommended in a sweeping report on the industry from the Law Commission.
Friday, December 3rd 2004, 3:45AM
by Rob Hosking
However the commission is passing a lot of the issues to the Task Force on Regulation of Financial Intermediaries.
“There is a general view that the current situation is unsatisfactory, and that those who advise consumers, not only in the life insurance industry but across the financial services market generally, must be sufficiently informed, and have the best incentives to give appropriate advice.
“We consider that this is the area causing the most problems in relation to life insurance, and suspect that these problems will not be reduced without further regulatory intervention.”
The commission says that the increasing integration of products means that “a new regulatory framework for financial advisers is a top priority, and any new framework should apply to all persons who offer financial advice (including advice on life insurance) to the New Zealand public."
The commission also wants establishment of independent analysts “to provide public comparative information on the solvency, activities and life policies of life insurers operating in New Zealand.”
Until they are established, it wants every life insurer to have a financial strength rating given by an approved rating agency.
The commission has also reiterated its earlier recommendation that all life insurers be brought under the Securities Act provisions with regard to advertising and disclosure rules.
In particular, it recommends the investment statement required by the Securities Act should be renamed the “product disclosure statement” and should be required in respect of all life insurance policies.
It also wants all life insurers offering life policies in New Zealand to incorporate as companies in New Zealand, unless specifically exempted.
Phil's Blog: More on Stobo and something quite different http://blog.goodreturns.co.nz/
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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