COMPLIANCE NEWS – INSURERS
JULY ISSUE | 2021
This month we look at the Financial Markets (Conduct of Institutions) and Holidays Increasing Sick Leave Amendment Bills and the New National Disaster Response Insurance Scheme.
We also provide our general update on relevant legislation.
FINANCIAL MARKETS (CONDUCT OF INSTITUTIONS) AMENDMENT BILL
Submissions to the Financial Markets (Conduct of Institutions) Amendment Bill closed on 18 June. The Bill is now awaiting its second reading.
The Bill requires financial institutions (including insurers) and intermediaries (including insurance brokers) to comply with the fair conduct principle created by the Bill. Financial institutions will be required to have more of an oversight over the actions of intermediaries they engage. This will involve training and overseeing intermediaries (including insurance brokers) who are distributing or managing the insurer’s products.
There was a fair amount of concern about the obligations imposed on financial institutions. One of the main concerns are that the Bill seems to require financial institutions to have a lot of control and oversight over intermediaries they engage. The issue is that in reality these financial institutions have very little ability to oversee and control the conduct of intermediaries.
The Bill also appears to overlap with regulatory obligations imposed under the new Financial Services Legislation Amendment Act (FSLAA) regime which is unnecessary and creates confusion. There is also concern about the cost of compliance the Bill will impose on financial institutions.
MBIE have released a Consultation Paper which includes a discussion on the options for the treatment of intermediaries under the new regime. We emphasise that MBIE has made it clear that it is not the responsibility of the financial institution to monitor an intermediary’s compliance with FSLAA and other enactments.
It is good to see that MBIE has been open to receive and consider consultation on this Bill. We will await to see whether these issues addressed in consultation are addressed in the second reading and provide an update in coming newsletters.
HOLIDAYS INCREASING SICK LEAVE AMENDMENT BILL
The Holidays (Increasing Sick Leave) Amendment Bill received Royal assent at the end of May. The Bill amends the Holidays Act 2003. The Bill increases an employee’s sick leave entitlement from 5 days to 10 days. The Bill also reduces the employee’s ability to carry over sick leave by reducing it from 15 days to 10 days entitles the employee to carry over up to 10 days’ sick leave rather than the current 15 days.
The changes will come into effect on 24 July 2021 (being 2 months after the date of Royal assent). All existing employees are not automatically entitled to the 10 days leave following this date. It is only after each employee passes their anniversary date (following 24 July 2021) that they will become entitled to the 10 days sick leave entitlement.
It is important that all employers update their employment agreements and internal policies accordingly. Please get in contact if you have any queries about how to implement the new law within your organisation.
NEW NATIONAL DISASTER RESPONSE INSURANCE SCHEME
The National Disaster Response insurance scheme began on Wednesday 30 June. The scheme has been described as one of the first in the world. The current process requires claimants to deal with EQC and their private insurer separately while the new scheme creates a single point of contact for all EQC claims.
Previously, a claim was first assessed by EQC and then a private insurer. The issue with this was that it caused delays, conflicting assessments of work which added to the stress of claimants in an already very stressful time. Under the new scheme, where a person has been affected by a natural disaster, private insurers who are part of the scheme (AA Insurance, Chubb, MFG, Ando (Hollard), IAG, MAS, Vero and Tower) can act on behalf of EQC to process claims.
Financial Markets (Conduct of Institutions) Amendment Bill
The Finance and Expenditure Select Committee reported on the Financial Markets (Conduct of Institutions) Amendment Bill on 7 August. The Bill now awaits its second reading.
Fair Trading Amendment Bill
The Fair Trading Amendment Bill is awaiting its third reading.
Insurance Contract Law Review
The exposure draft Bill for consultation is anticipated to be released mid-2021.
Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill
The Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill is currently with the Select Committee. The Committee stopped accepting submissions on 28 May 2021.
Disclaimer: The information contained in this newsletter is provided for general purposes only, and should not be construed as legal advice on any matter.
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Laura Sookahet/Senior Associate
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Andrew Goble/Senior Solicitor
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Stacey Craig/Law Clerk
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