COMPLIANCE NEWS – INSURERS
ISSUE MAY | 2022
Cross-sector thematic review on governance
The Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA) are jointly conducting a cross-sector thematic review on governance this year.
The purpose of the review is to assess regulated entities, including insurers, to assess the effectiveness of board practices to effectively govern and provide oversight. RBNZ says regulated entities are expected to have effective boards which are able to make sound judgements in the best interests of the entity and key stakeholders.
RBNZ is looking to develop an understanding of the structure, processes and operational practices of boards and examine how board practices adhere to RBNZ’s governance expectations. With this understanding RBNZ hopes to share good practices and recommend improvements across sectors.
Last year, an independent report into Westpac New Zealand’s governance caused concern for the Board’s oversight. Deputy Governor and General Manager of Financial Stability Geoff Bascand said the risk governance of Westpac NZ’s Board needs to see “significant improvement”.
He also said “the report’s findings highlighted material risks to effective risk governance and noted that the role played by the Board fell short of the standard expected of an organisation of the bank’s scope and scale. In some cases, issues that had been acknowledged by the Board for several years had not received due attention or effective remediation…The report found there had been historic underinvestment in risk management capabilities at the bank with investment appearing reactive, rather than strategic.”
The RBNZ says the findings of the Westpac NZ report should serve as a “timely reminder” for other regulated entities to consider their own risk governance practices ahead of the cross-sector thematic review on governance.
The review will assess the board practices of 32 entities from the banking, insurance, non-bank deposit taking and investment management sectors. The RBNZ will produce a report once the thematic review has been completed.
The thematic review is expected to take 12 months. We will continue to provide updates on this as they become available.
Increase in health insurance cover for New Zealanders
The Financial Services Council (FSC) recently released their quarterly snapshot of the health insurance industry as at 31 December 2021. The FSC says that there has been an increase in health insurance cover for New Zealanders with number of people holding health insurance growing by 30,000 in the last quarter.
Richard Klipin, Chief Executive Officer of the Financial Services Council, said “our latest data shows that more Kiwis are thinking about their family’s health and wellbeing through the lens of Covid-19, especially during lockdowns and now as the Omicron wave is hitting the country.”
Klipin also suggests that there has been an increase in group insurance cover with employers introducing health insurance as an employee benefit at a time when businesses are looking at ways to attract and retain talent in a competitive labour market.
The same trend has occurred in life insurance policies with the number of people getting life insurance policies rising by 92,000 in the last quarter. The FSC suggests the increase in life insurance policies is also due to covid-19 having an impact on families and individuals looking to protect their financial wellbeing and better manage their risk through these difficult times.
Protected Disclosures (Protection of Whistleblowers) Bill
The Protected Disclosures (Protection of Whistleblowers) Bill (the Bill) was introduced to Parliament in June 2020. The Bill is currently awaiting the third reading and is expected to come into force 1 July 2022.
The Bill replaces the Protected Disclosures Act 2000 and looks to clarify the definition of serious wrongdoing, enable people to report serious wrongdoing directly to an appropriate authority and strengthen current protections for disclosers.
The Bill will make the following changes:
- Clarify the definition of ‘serious wrongdoing’ while extending its application to cover private sector use of public funds and authority;
- Enables people to report serious wrongdoing directly to an appropriate authority at any time, while clarifying the ability of the appropriate authority to decline or refer the disclosure;
- Strengthens protections for disclosers by specifying what a receiver of a disclosure should do;
- Clarify internal procedure requirements for public sector organisations and require them to state how they will provide support to disclosers;
- Clarify the potential forms of adverse conduct disclosers may face.
The latest version of the Bill was published 8 March 2022 and is currently awaiting its third reading.
Please get in contact with Mahony Horner Lawyer’s insurance team for advice on how to ensure your organisation’s processes align with the Bill.
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 2020. The Bill is currently at the second reading stage.
Insurance Contract Law Review
The Ministry of Business, Innovation and Employment (MBIE) released the draft Insurance Contracts Bill on 24 February 2022. MBIE is currently seeking feedback on the draft Bill. Submissions can be made on MBIE’s website. Submissions close 4 May 2022.
Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill
The Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill received royal assent on the 27th of October. XRB is seeking feedback on the Standards. The exposure draft is expected to be released 1 July 2022.
ACC Income Protection Scheme
The Ministry of Business, Innovation & Employment are accepting submissions on the scheme. Submissions can be made on MBIE’s website here. Submissions close 26 April 2022.
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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