We have just been through the busiest period for base rates changes, we think, that the New Zealand market has ever seen.
In Australia, calls for insurer transparency have intensified following investigations into premium hikes and product design. APRA has critically examined premium rises in life insurance, focusing on whether insurers have addressed issues previously raised by the regulator. APRA highlighted concern over fairness, transparency, and product design.
It is important to consider each type of issue.
Transparency is raised because labels like “stepped premium” do not always clearly convey to clients what is going to happen with their premium – and how combinations of age-related increases, inflation, and base rate changes can mean big increases in cost.
Another component of transparency is base rate change. For some products base rates have been revised between two and five times in 10 years. For medical insurance, its annual.
That momentum is mirrored here in New Zealand - driven largely by the Financial Markets Authority (FMA). Since 2019, the FMA and RBNZ have targeted a wide range of insurers (life, general, and health) through conduct reviews. These investigations have often revealed problems with pricing mechanisms, accuracy, and have resulted in refunds and fines.
Add to that conduct licensing came into force in March 2025, mandating “fair conduct” standards throughout the customer lifecycle, plus the implementation of the new Contracts of Insurance Act, passed May 2024, and throw in consumer unhappiness: FMA research shows 57% of Kiwis consider insurer conduct unfair.
What could be coming?
We think a range of actions such as possible disclosure to clients – and advisers, of re-rating mechanisms. Like in Australia, New Zealand insurers may be asked to publicly justify premium increases.
Insurers may also be asked to consider product labelling and design issues more closely and that could, for example, include the likelihood of a base rate increase
There may be technology demands: such as a requirement for the use of calculators, tools, and decision aids to demonstrate the impact of probably price changes – as most clients simply couldn’t work it out for themselves – and that’s where the process will affect advisers more too. But you probably already know that, given the extent of the price changes you have had to deal with over the past year.
It explains why the history of price changes was an unexpectedly popular feature we launched last year.
Another possibility is more level premium options – to help to manage client concerns with what are currently variable premium rate for age products, and even rate guarantees. That last one we’ve just seen with the launch of AIA’s new Cover for Life.
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