Insurers react to proposed NZ Income Insurance scheme

Life insurance companies have given muted support for the Government's proposals to create a New Zealand Income Insurance Scheme.

Thursday, February 10th 2022, 11:13AM

The Government, Business New Zealand and the New Zealand Council of Trade Unions say the proposals are a new way of better protecting workers and the economy. It will support workers with 80% of their income for up to seven months if they lose their job through no fault of their own.

It’s expected under the proposed scheme, people will have the time and financial security to find a good job that matches their skills, needs and aspirations, or retrain for a new career.

Cigna New Zealand chief executive Gail Costa (pictured) said, “Based on the information we currently have, the proposed scheme looks to be a positive initiative that will complement the work done by our industry and the products we offer by providing a limited amount of short-term cover.”

“If adopted, the scheme won’t cover anyone’s full insurance needs, so we’d encourage people to speak with an adviser to understand how the scheme impacts them and what the right level of cover is for their needs both in the short and long-term”, she added.

Meanwhile AIA says it welcomes the opportunity to be part of a conversation and intends to provide a submission to the consultation process.

Sharron Botica, acting CEO AIA NZ said, “Our goal is to see New Zealand become the healthiest and best protected nation in the world. We welcome any proposal that helps address the need for Kiwis to be better financially protected.”

A spokesperson for Fidelity Life, Hamish Anderson added “We’re broadly supportive of ideas that help educate New Zealanders about the importance of protecting what’s important to them, and help address New Zealand’s under-insurance problem. We’re still assessing the proposed scheme and what it might mean for our business.”

The news of general support from the insurance industry came after the EMA (Employers and Manufacturers Union) said it would not support the NZ Income Insurance Scheme. It said if the scheme were implemented, a higher amount would be paid by business for a longer duration, so it essentially amounts to a further tax on business.

Chief executive Brett O’Riley says the NZIIS now includes health and disability, which was originally out of scope. "(It) means a higher amount would be paid by business for a longer duration, so it essentially amounts to a further tax on business."

"We understand that health includes mental health, stress and fatigue, but these are very subjective conditions with both work and non-work components," he says.

Consultation on the proposed scheme is now open with submissions set to close on 26 April 2022.

Tags: NZ Income Insurance scheme