Brokers should also be responsible
06 Jul 2017
More than half the insurers in the RBNZ’s recent review 60% of insurers didn’t meet financial strength rating disclosure requirements. ICNZ says brokers should also take some responsibility.
“The disclosure requirements for many appeared to be viewed as a compliance exercise rather than giving it profile and providing this important information for policyholders to assist in their buying decisions,” the RBNZ says.
Dubbing the level of compliance, “generally disappointing” and needing to “markedly improve”, the RBNZ’s language doesn’t get much harsher than this.
Insurers say brokers also need to take some responsibility.
The CEO of the Insurance Council of New Zealand, which represents general insurers, accepts the RBNZ’s message that “insurers must do a lot better”.
Yet Tim Grafton believes the report highlights the need for brokers to also be required under the law to provide policyholders with the likes of financial strength information that the underwriter provides them.
“About half of New Zealand’s premium is brokered, but brokers carry no liability for non-compliance. It rests solely with the underwriter. It can be very difficult for underwriters who have no contact with the insured, to enforce compliance,” Grafton says.
“So if the intent is to make sure the insured is informed about solvency and financial strength ratings, then the IPSA could potentially be amended to cast a wider net to [include brokers].”
The RBNZ’s review found “a number of examples of disclosures not made by the intermediary before entering or renewing a contract”. But it confirms: “It is the licensed insurer’s responsibility to ensure disclosure is made.”