About the review
This review followed an earlier review we did with the Financial Markets Authority (FMA) into conduct and culture in New Zealand retail banks.
Buying life insurance is one of the most important financial decisions people will make and customers should be able to have confidence their insurance will do what the insurance company or their financial adviser has told them.
Given the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (ARC) had highlighted failings in the treatment of life insurance customers in Australia, we wanted to know whether there was widespread conduct and culture issues present in life insurers in New Zealand, and to understand how life insurers identify and remediate issues.
What the review found
The review found extensive weaknesses in life insurers’ systems and controls. This included weak governance and management of conduct risks across the sector and a lack of focus on good customer outcomes.
While the review did not find widespread cases of misconduct by life insurance companies, it did find several instances of poor conduct. There were also a small number of cases of potential misconduct (that is, breaches of the law), which have been investigated by the appropriate regulator.
Some of the issues and themes are similar to those highlighted in the ARC, although on a smaller scale. Both the Reserve Bank of New Zealand and the Financial Markets Authority were not confident insurers were aware of all the issues highlighted. This created a serious risk of more conduct issues arising.