Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

RBNZ highlights exorbitant life insurance commissions

By Jenny Ruth

Nov. 28 (BusinessDesk) - The Reserve Bank is sending a strong signal to the life insurance industry that broker commissions are way out of whack with international comparisons.

The central bank’s latest six-monthly Financial Stability Report contains a chart showing that commissions on life insurance policies in New Zealand are a whopping 20.4 percent of gross premium revenue.

The country charging the next highest commissions is Mexico at a much lower 12.8 percent. Countries New Zealand would prefer to be compared with range from Denmark at just 0.2 percent, Germany at 6 percent, the United States at 6.6 percent and Australia at 9.2 percent.

“It’s an exciting chart,” Reserve Bank governor Adrian Orr told journalists at the media briefing on the latest report.

“We put it there specifically because sunlight is a good disinfectant,” Orr said.

“We can’t micro-manage this industry but it has some real specific issues.”

Another problem in the life insurance industry the Financial Markets Authority has been targeting is the practice of agents churning clients from one policy to another just to generate additional commissions and often to the detriment of the client.

An FMA study of 11 life insurance companies published in July found only about 2 percent of sales of life and other related policies are actually new and that the rest are simply replacing existing policies.

The central bank and the Financial Markets Authority are set to report on their review of the insurance sector’s conduct and culture in January.

(BusinessDesk)




© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Provincial Growth Fund: Backing Growth In Gore

“Today’s announcements are a $1.6 million investment towards the Maruawai precinct project, which involves the redevelopment of the Hokonui Moonshine Museum and creation of the Maruawai Heritage Centre...” More>>

ALSO:

Inflation: Cigarette Price Rise Offsets Cheaper Petrol

The consumers price index (CPI) rose 0.1 percent in the March 2019 quarter, due to higher prices for cigarettes, Stats NZ said today... In the year to March 2019, the inflation rate was 1.5 percent, down from 1.9 percent in the December 2018 year. More>>

ALSO:

Government Suppliers: MBIE Reinstates Fuji Xerox As A

The government has reinstated Fuji Xerox as a supplier despite an ongoing Serious Fraud Office investigation into accounting irregularities that led to losses of more than $300 million. More>>

ALSO:

PSI: Service Sector Growth At Lowest Level Since 2012

April 15 (BusinessDesk) - New Zealand’s services sector activity grew at its slowest pace in more than six years in March, potentially signalling a slowdown in the domestic economy. More>>

ALSO: