24 Jul 2015

Council calls for report on insurance sales

4:37 pm on 24 July 2015

The Financial Services Council wants to ensure people selling life and income protection insurance aren't making customers worse off if they switch providers.

The council has commissioned a report studying the sales tactics and incentives used in the personal insurance industry.

It is part of the council's response to an information request from the Financial Markets Authority and a review of the Financial Advisers Act by the Ministry of Business Innovation and Employment.

Council chief executive Peter Neilson said New Zealanders often switch policies between

companies because their new policy is better value, has better coverage or is being

provided by a company with a better solvency rating or better claims record.

But sometimes when a policy is switched it is not to the benefit of the customer, who could lose coverage for a pre-existing condition.

Mr Neilson said the independent report, by the consulting actuaries Melville Jessup Weaver, would help provide remedies that benefit customers.

"We expect the report will identify possible solutions for these issues," said Mr Neilson. "The Council aims to have its own firm recommendations available by the time we submit on the Financial Advisers Act review proposals later this year."

Mr Neilson said the review would ensure consumers were well served by the industry.

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