The FMA has issued a serious warning to the general insurance industry, stating that it is not ready for a new law requiring good behavior and fair treatment of its customers.
Thursday, July 22, 2021 6:00 AM
FMA’s Claire Bowling Ford.
Financial Markets Authority (FMA) Insurance Implementation and Culture: Fire and General Insurance Companies According to a report this morning, general insurers “… do not have a broad understanding and commitment to good behavior and cultural practices.”
This report summarizes responses to FMA’s 2019 Life and Culture Review of Life Insurers conducted by FMA and the Reserve Bank of New Zealand, but does not include the life insurance sector.
The FMA states that due to the impact of Covid-19, it requested an insurer’s response in December 2020, about 18 months after the initial request, but in most cases the response was inadequate and inadequate. Yes, there were only two of the 42 insurers, IAG and Medical Guarantee. Society-Meet expectations.
Fire and general insurance companies, which fall into the categories of housing, content, vehicles, commerce, liability, travel, and health insurance, ensure that there are no serious behavioral issues and do good in dealing with consumers. I was asked to review my work to show.
The FMA report concluded that the sector is not ready for a Financial Markets (Institutional Behavior) Amendment Bill (CoFI) to expand FMA’s authority to regulate and authorize the behavior of the insurance sector. ..
In response, the New Zealand Insurance Council (ICNZ) acknowledged the need for continued improvement in the sector (see comments below).
The report states that the majority of insurers do not complete reviews on the right criteria and 95% of responses are inadequate or inadequate.
Clare Bolingford, FMA Director of Banking and Insurance, said in a substandard response to FMA requirements, insurers also revealed a lack of concern about guaranteeing good customer results.
“The new legislation has not yet come into force, but the core code of conduct should apply throughout the financial sector. We have reiterated this point over the years and provided various resources to this section of the industry. And I published the report and measured myself, “says Bolingford.
-Only two of the 42 insurers fully met FMA expectations-IAG and Medical Assurance Society
-Approximately 95% of responses did not meet FMA expectations
-71% of responses were considered inadequate
-Only 9 insurers have identified customer vulnerability as a key issue
-30 out of 42 insurers have completed the FMA action plan, but 19 provided inadequate details
-22 out of 42 insurance companies have completed product reviews.Only 6 improvements were needed for the product review process
-28 of 42 insurers working to remove volume-based incentives for internal staff
In this review, many insurers are unable to actively monitor product suitability, effectively withdraw low-value or legacy products, and overcharge some customers. understood.
Examples of actions that need to be corrected include insurers double-billing customers several times, not giving customers multi-policy discounts, and significantly overcharging some premiums due to inadequate IT systems. , No claim bonus does not apply, late fees are charged without good reason, customer-included data (such as date of birth) is inaccurate, product features and benefits are outdated and may be claimed Is low.
Bolingford states that some insurers need to carefully consider what they need to do to meet the proposed requirements for licenses to operate under the new behavior. ..
“They will need to ensure that their products and services are clearly understood by their customers and meet their needs,” she says.
FMA and all New Zealanders who rely on insurance companies to protect their families, businesses, lives and property expect it.
Tim Grafton, CEO of ICNZ, said the report shows that many improvements are needed before the CoFI law comes into force.
He states that the insurance sector can work with the FMA to address all concerns and meet expectations at the time.
“I don’t think this report reflects the status quo of ICNZ members,” he said.
ICNZ represents the fire and non-life insurance sector. Of the 42 insurers we approached, 16 are members of ICNZ.
“The new system of action under CoFI will strengthen this and provide the sector with 18 months to get it right.”
Grafton said ICNZ fully supports the steps to ensure good customer results and is confident that its members share this commitment.
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