Law Commission's recommendations sidelined
The government has responded to the Law Commission’s review of the life insurance sector and kicked most of its suggestions into touch.
Friday, May 27th 2005, 5:47PM
The commission’s report, released just before Christmas, contained many wide-ranging suggestions that would have had a significant impact on life companies and advisers, including putting risk advisers under the same disclosure regime as their investment counterparts.
However, the over-riding theme in the government’s official response, released on Friday, was to push all the suggestions aside until the Task Force on the Regulation of Financial Intermediaries reports later this year, and until the Review of Financial Products and Providers (RFPP) reports.
It has become clear that the RFPP has become the over-riding vehicle the government is using to reform the financial services sector.
Among the changes suggested by the Law Commission were the idea of having the government “support and promote the establishment of a number of independent and competent life insurance analysts to provide current comparative information on the solvency, activities and policies of life insurers.”
It also suggested that all life insurance companies should be incorporated in New Zealand so that they come under this country’s jurisdiction.
Another suggestion was that all life companies be required to obtain independent financial strength ratings as this is considered an effective and relatively inexpensive way of providing some independent comparative information to assist advisers and consumers in making decisions on life policies.
The government says that although a lot of work has been done on this ratings issue it has been “put on hold” and will now become part of the RFPP.
The commission also proposed the establishment of a suitable body to undertake a public educational role in relation to life insurance.
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