Therese Singleton
Therese Singleton
Policyholder Andrew Body’s petition was heard on Wednesday, asking for the House to urgently review the Insurance (Prudential Supervision) Act (IPSA) to ensure that policyholders are treated fairly when a life insurer is sold.
The sale of AMP Life to Resolution Life was finalised on Wednesday.
Body told the committee that he had no choice but to participate in the transaction. “If I was to change my policy or move to another life insurance company, I would be substantially worse off. It’s absolute compulsion. The problem I really have is I haven’t been consulted, I have no information about this transaction, it’s a mystery. All I know about the purchaser is it’s a Bermudan tax haven company apparently controlled by a financial entrepreneur from the UK.”
Body said he could not think of any other transaction of a similar size and complexity in which the major stakeholders knew nothing.
“It’s an indictment on the law, which is completely inadequate, and the process which has also been inadequate.”
The Reserve Bank had made it clear it was only interested in the solvency of the purchaser, he said.
A trust has been set up to provide security for policyholder benefits or investments in New Zealand but Body said it was not possible for the beneficiaries of that trust – the policyholders – to access information about it.
The Financial Markets Authority should have been required to approve the transaction, he said. The planned IPSA review had too long a timeline.
Reserve Bank deputy governor Geoff Bascand said it was only the ultimate ownership of the company changing and AMP Life was still continuing as the insurer.
He said he was not convinced there was a gap in the legislation but the questions raised were a reason to look at it. There needed to be a balance of policyholder interest with incentives for investment, he said.
“If you favour one party entirely at the expense of others, there are dynamics in the industry you have to be wary of in regard to the provision of ongoing service.”
He said, with regard to policyholders accessing information about the trust, the policies still remained with AMP Life.
FMA director of regulation Liam Mason said his organisation did not have a role in the sale of life insurance companies, but if it had the legislation it would look at transactions like this.
Resolution Life NZ chief executive Therese Singleton said policyholders who were concerned about things such as policy increases would continue to contact her in the first instance. She said the Reserve Bank had been “thoroughly diligent” in its oversight of the transaction. The rigour that had been applied had created better protection for policyholders, she said.
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