Regulators 'may misunderstand' legacy products

As part of their report into the conduct and culture of New Zealand life insurers, the Financial Markets Authority and Reserve Bank questioned how legacy products were dealt with.

Legacy products are those that are no longer open to new clients but which are still offered for those who already have the policies.

The regulators said they heard evidence that insurers’ staff and advisers lacked understanding of legacy products because they had insufficient training and guidance.

“Insurers rely heavily on a relatively small number of long-tenure staff members’ experience with these products. There is a risk to the insurer and its legacy product customers if these staff members leave. Insurers need to better mitigate this risk,” they said in their report.