Key consultations to protect policyholders

If you care about protecting policyholders, you should look at the current consultations being run by the Reserve Bank of New Zealand (RBNZ) and Advertising Standards Authority (ASA).

Tuesday, September 14th 2021, 9:33AM

by Russell Hutchinson

The RBNZ is running a consultation on the Insurance (Prudential Supervision) Act – or IPSA. Currently, they are focused on the parts of the Act that protect policyholders and important trade-offs are at stake.

We can make the world ever safer – but at the cost to shareholders, other stakeholders, and coverage for consumers if we tilt the balance too far.

Equally, we want to make sure that adequate protections are in place.

There are some important issues being considered in the current consultation.

It has been a technical discussion to date with complex details of required reserves and capital being a major part of the long process.

But helpfully an introduction and a non-technical review has been published, which you can find here.

Should you take a look? Yes, I think so – if you have a view about the relative merits of policyholder protection, and I know many of you do, then it is worth a read.

Even if you read and decide not to make a submission, you gain by knowing more about RBNZ’s role in the supervision of insurers – which is great to be able to explain to people who want to know if they can trust the industry with their premium dollars.

But maybe you will make a submission or be better informed and able to contribute through your industry association.

At the same time, there is a consultation being run by the ASA on the code of practice for financial advertising.

There is a special code because of the complex nature of financial products – but it isn’t too onerous.

The main questions in the review are whether to include additional products (think crypto and buy-now-pay-later schemes). You can find out more about the consultation here.

Should you submit on the update? Maybe, but at the very least it provides a timely reminder about knowing what the code says.

Although relatively few advisers think of themselves as engaging in advertising, it is easy to slip into it; to go from a post online to ‘promoting’ the post – which is advertising.

Well worth being across the requirements.

Tags: advertising consultation Opinion RBNZ Russell Hutchinson