Insurance

FSC calls for more time for New Zealand revenue insurance scheme

The Financial Services Council of New Zealand (FSC), in its communication on the proposed New Zealand Income Security Scheme (NZIIS), has called for more time and broader industry engagement to ensure that the scheme is best placed to achieve its objectives.

“FSC welcomes the discussion on Income Security which is essential for all New Zealanders. Risk management and insurance needs are important to all Kiwis. The Covid pandemic has recently brought these issues to the fore,” said FSC CEO Richard Klipin.

“FSC aims to help Kiwis increase their financial confidence and well-being, and it is crucial that the proposed NZIIS is well designed so that it can play an effective and important role in this regard.

“The NZIIS is a big change for New Zealand. We welcome the vision, but urge the government, CTU and Business New Zealand to consider pausing development of the program to allow for a fuller and more comprehensive engagement process on the NZIIS proposal.

The FSC raised the following concerns in its submission:

Rushed policy development process: Developing a good policy takes time. We are concerned that the policy development for the NZIIS proposal has been unduly rushed for a scheme of this complexity and will likely lead to poor drafting and ultimately poor public policy outcomes.

Lack of industry engagement:
Our industry has been managing the life and health insurance of New Zealanders for generations and has the skills, capabilities, depth and understanding to make a scheme like this work. Given this specialist knowledge, it is concerning that the sector was not consulted during the design and development of the proposal and was only engaged once the proposal was released. to the general public for comment.

Creep scope: We note that the proposal recognizes that the NZIIS would be a significant reform, perhaps the most significant of its kind since the introduction of the Accident Compensation Corporation (ACC) in 1974. The reach of the NZIIS has continued to grow.

Schedule of the consultation process: The significant scope of the proposal compared to the lack of prior industry engagement and a period of consultation in the midst of the Omicron outbreak and at a time when our industry is facing an almost unprecedented volume of changes regulatory or proposed (largely postponed from 2020/2021 due to Covid-19) is a significant concern.

The NZIIS represents an important and complex piece of social policy with major implications, opportunities and risks for New Zealanders. It’s essential to get it right and give the proposal the time it deserves.

The FSC submission also raises the possibility of the NZIIS being implemented through a public/private partnership approach.

“We believe a public/private approach similar to that taken with KiwiSaver should be investigated and considered,” Klipin said.

“This type of model would allow the life and health insurance industries to contribute their capacity and expertise to help solve a national problem, in a framework facilitated by the government.

“It’s a great opportunity to bring the best of both worlds together.

“New Zealanders deserve the best possible program and it will take time, commitment and capacity to develop. We look forward to being part of the solution and the future of NZIIS,” concluded Klipin.

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