Sharechat Logo

FSC says Kiwis are under-insured as regulatory deadline approaches

Tuesday 11th June 2019

Text too small?

Research commissioned by the Financial Services Council found most New Zealanders don’t like to think about the consequences of risks to life and limb - or to pay for financial protection against such risks.

“Our research indicates that despite recognising that financial risks exist and that they could cause significant disruption to day-to-day living, over 25 percent of New Zealanders tend not to think about how they could be impacted financially,” the survey of more than 2,000 people found.

“Over 40 percent of respondents occasionally think about and consider this type of risk, but then forget about them.”

The research comes just weeks before the country's life insurers are due to report to regulators on plans to improve their performance.

The Reserve Bank and Financial Markets Authority reported in January that the first stage of their review of 16 life insurance companies found the industry is vulnerable to misconduct, is ignoring whether its products are suitable for customers and is too slow to make changes.

Those companies were sent follow-up letters detailing their individual shortcomings and requiring the companies to report back to the two regulators by June 30.

FSC chief executive Richard Klipin says the conduct and culture review wasn’t related to his organisation’s decision back in February to commission the research, but he acknowledges that it is relevant to how the industry behaves.

The survey, conducted by Horizon Research, highlights how financially unprotected many New Zealanders are.

It found two-thirds of New Zealanders don’t have sufficient savings to cover an unexpected short-term loss of income for three months.

About one in three said they don’t need to worry about paying for medical treatment because of ACC or the public health system, but 37 percent said they do worry about such costs.

“The sector needs to lead a debate and discussion around risk,” Klipin says.  

The research findings are “a call to action,” he says. “The flip side is the sector’s also got a task to do. We’re the people who manufacture the products and engage with consumers. The message is that we can and should be doing more.”

The message in FSC’s research certainly chimes with the advertising campaign one of its more prominent members, Partners Life, launched in March.

Rather than promoting Partners Life per se, the campaign was designed to raise awareness of the need for life insurance and income protection insurance.

The research found that unaffordable premiums were the biggest reason why people are under-insured, followed by insurance being “not a priority” and then by policies not representing value for money.

Previous FMA studies have concluded that only 2 percent of sales of life insurance policies are genuinely new, rather than just churn, or switching customers between policies to generate income for life insurance agents. However, the industry disputes that estimate.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Asset Plus sells Heinz Watties distribution centre for $29.1 mln
18th July 2019 Morning Report
COMMENT: RBNZ's key political omission in its bank capital proposals
ANZ and Westpac credit rating outlooks downgraded to 'negative' outlook: Fitch
MARKET CLOSE: NZ shares edge higher in quiet trading; weaker currency buoys exporters
NZ dollar stalled amid uncertainty about US rate cuts
RBNZ a 'poor communicator' - CBL's Harris
Methane reduction target could be catastrophic - Fonterra Shareholders' Council
Greater role for gas in electrification of transport, industry
Chorus sees growth in high value gigabit fibre plans

IRG See IRG research reports