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Online KiwiSaver provider Simplicity has released a list of questions it claims should form the basis of a Royal Inquiry into the insurance, banking and finance sector.
The misconduct exposed in the Australian Royal Inquiry has some similarities in New Zealand, claims Simplicity managing director Sam Stubbs.
“Recent revelations in New Zealand include misrepresentations of independent advice and products by two Australian owned banks, $19 million of trips for insurance agents meeting sales targets, and pressure for bank tellers to sell inappropriate products to meet sales targets,” he noted.
Stubbs said many of his proposed questions are those that have been asked by the Royal Commission of Inquiry in Australia. Some, he explained, were from industry executives who have approached Simplicity on a confidential basis.
The proposed questions that relate to insurance include:
Commission levels and churn
* Why are life insurance premiums remaining so high in a competitive environment? Who is controlling what is paid, the product manufacturer/provider or the sales agent?
* How do we measure churning of policies to generate new commissions? With so few NZ adults insured, how can the industry deliver such high profits and shareholder returns?
* NZ has not followed Australia’s lead in reducing commissions paid to life insurance sales agents. The high commission incentives have not led to more New Zealanders being insured. Does this mean they are driving the wrong behaviours?
* Have non-cash incentives paid by life insurance providers e.g. overseas trips, incentivised appropriate sales behaviours?
Funeral, credit card and repayment insurance are criticised as expensive and delivering poor value to customers.
* Do customers really understand what they are paying for, and the real cost relative to the benefit?
* Are some customers being sold funeral insurance by companies that could sell them lower cost life insurance with better terms?
* When is credit card repayment insurance in the best interests of customers? How profitable is it for banks?
“Much of the wrongdoing in Australia is by the same companies selling similar products over here,” Stubbs said. “The questions could easily form the framework for a Royal Inquiry, as they all need answering.
“It took a Royal Commission to get the answers in Australia, with chief executives under oath, and whistleblowers protected. We need that here too,” he added.
Stubbs also quoted Australian Prime Minister Malcolm Turnbull who recently apologised for not calling a Royal Commission earlier in Australia, calling it a “mistake” to delay it.
“None of these questions will be a surprise to industry insiders. Let’s see if the answers will be a surprise to the public,” Stubbs added.
Would you like to see these questions, or additional questions, posed in a wide-scale inquiry? Leave a comment below with your thoughts.
