With both regulator reviews and the Royal Commission final report finally released, the insurance sector continues to grapple with what it will ultimately mean for operations – but according to Lyn McMorran, executive director of the Financial Services Federation (FSF), the implications for New Zealand will be significantly less drastic than they will be across the Tasman, and will focus heavily on simply straightening up processes.
“We’re really looking at what’s come out of the Royal Commission in terms of the recommendations around conduct and culture,” McMorran told Insurance Business.
“It’s not just about compliance and whether or not you’re in line with the law, but it’s about how it sits within your culture and how that’s leading to good customer outcomes. We think most people are doing relatively well with that, but you can always look at your processes a little more carefully and ask – ‘Are we just looking at customer satisfaction, or is this actually the best outcome for them? Can they be sure that the business that’s being referred to them through a broker channel is taking those customer outcomes into account?’”
“We’re also looking at the need for boards to become much more involved in culture and conduct, instead of simply considering the financial performance of an organisation,” she explained.
McMorran says the FSF regularly interacts with a range of industry bodies, and their focus is entirely on getting the best outcomes in place for consumers. This includes pushing through the ‘backlog’ of legislation that has been in the works for some time, including FSLAB and the insurance contract law review.
“Those regulatory processes need to be pushed forward so that people can have certainty around what they need to comply with,” she stated.
“The FMA and RBNZ have determined that there are no systemic issues here, but there are certainly issues at the margins. That’s not unsurprising when certain companies are as big as they are and their channels are so complex, but there is a sense that any instances of misconduct may primarily be down to lack of good systems and processes. If would be one-offs, it wouldn’t be a systemic issue, and the reviews that we’ve had have reflected that.
“It’s borne out of what the industry has been saying all along, which is that we are different from the Australian parent companies.”