tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Wednesday, July 8th, 12:49PM

Mortgages

rss
Latest Headlines

What will happen to insurance premiums under the new regime?

Improved industry standards could stabilise insurance premiums under the new financial advisers regulatory regime, according to one industry expert. 

Friday, February 21st 2020, 8:48AM 1 Comment

Andrew Ford

Andrew Ford, head of financial and professional risks at insurance broker Crombie Lockwood, says rising standards under the FSLAA regime could reduce the risks for insurers and help keep a lid on rising premiums.

Premiums on professional indemnity insurance have risen in recent years amid increasing claims here and in Australia. Yet Ford does not believe the new licensing regime will further add to the problem for advisers.

“From an insurance premium point of view, the ones that have gone through licensing will be at a higher bar than it has been," Ford added.  "Under the new regime, a lot of advisory firms will have had to pull their socks up. In my view, the new licensing regime isn’t going to cause insurance premiums to rise for advisers. If you’ve jumped through the hoops to be deemed fit and proper, then you’re actually less of a risk going forward. It’s a positive thing for insurers and should be better for the risk base of their clients.”

Ford played down fears that the new regime would lead to major increases in premium rates.

“Potentially it could have the impact of stabilising [rising] premiums, because advisers will have a more robust risk management programme in place," he added. "Under the licensing requirements, businesses will have compliance and risk officers to demonstrate their adherence to the new standards which require them to be focused on customer outcomes above all else."

"With the new regime in place, insurers will take a wait and see approach. But it should lift advisers to a higher standard," Ford added.

However, the insurance market could change if the FMA takes a more aggressive enforcement approach under the new regime.

Ford warns "under the new regime there will be more FMA oversight, and if they take a heavy handed approach we will see insurance premiums start to move again”.

Ford also sounded a warning on directors and officers' insurance (D&O), with claims increasing in recent years.

“Directors and officers liability premiums are also increasing as there has been increased claims activity in this area both in NZ and in Australia resulting from the Royal Commission. We are also seeing the arrival of litigation funders on our shores," he added.

 

 

Tags: FSLAA insurance

« Newpark partners with Real Estate TogetherKiwibank lending rises, profit falls »

Special Offers

Comments from our readers

On 21 February 2020 at 11:19 am Andrew Scott, GM Newpark said:
It's not professional indemnity premiums Advisers need to be concerned with.

The real issue will be the pressure on directors and officers' insurance (D&O) when you consider FAPs taking on the liability for a large number of Advisers. More Advisers = more potential claims = exponentially increased premiums.

The reality is the cost will fall back on the individual Adviser, not the business.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • What I'm seeing at the moment
    “There were 28 life insurers when I entered the industry. Given NZ's insurable population base today you could say that five...”
    2 hours ago by Matron
  • What I'm seeing at the moment
    “What makes it more interesting is that basically there are only five , serious Life Insurance companies and now , two of...”
    4 hours ago by Elephant1
  • Replacement case puts spotlight on 'churn'
    “@Tash - Apologies if I was a tad abrupt, the finger pointing to advisers whenever there's an issue gets a tad repetitive...”
    23 hours ago by Skeptical
  • Greens want ACC extended to cover sickness
    “What about making all personal and business insurance premiums tax deductible with benefits non assesable. Or offer a tax...”
    1 day ago by Advice4Life
  • Replacement case puts spotlight on 'churn'
    “thanks skeptical, the main purpose of my comment was to highlight how ridiculous the notion is that insurers know more about...”
    1 day ago by Tash
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 ▼2.65 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.65 2.69 2.79
Median 4.55 3.19 3.22 3.39

Last updated: 8 July 2020 8:57am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com