Insurers have been buried in work recently. Here on Good Returns, you can find an interview with Naomi Ballantyne, CEO, Partners Life, in which she talks about the effect of the effort required to respond to the FMA/RBNZ’s conduct and culture investigation.

The pressure is real, and it is being felt by every single insurer from large to small, from niche to mass market. Although you may find it hard to feel an awful lot of compassion for companies worth, typically, hundreds of millions of dollars, I invite you to feel some fraternal concern for the people that work in them.

If you’re wondering why you haven’t seen much of the life insurance sectors’ CEOs and senior leadership teams recently, this is why:

In addition to the conduct and culture review, there are two major consultations going on right now, with tight timeframes. The first is the Conduct of Financial Institutions options paper, the second is the Insurance Contract Law options paper.

Both were issued by MBIE at the end of April and submissions are due by the end of next week. Although each paper is ‘only’ a few dozen pages long the impacts of some proposals have potentially huge effects. If we get the law wrong, we could damage distribution of insurance considerably. Two proposals illustrate the risks.

• If the proposals require insurers to have too much responsibility for suitability this could wreck adviser distribution through duplication of costs. I am sure that is not the intention, but it is a good example of what is at stake when responding to a consultation on the options.
• If proposals for insurance contract law require that medical information is obtained in every case then the cost burden on consumers could rise substantially. Again, this is not an intention, but a risk. The desire from everyone at MBIE right the way through the industry, is for an efficient marketplace where affordability is enhanced.

Those issues are just two examples. I could offer at least a dozen more. The impact is such that one corporate lawyer, who has a prodigious capacity for work, remarked that once this is done, with they would quite like to stare at a blank wall for a month.

But they won’t get a chance. After the options papers, we will return to work associated with the implementation of the new adviser law, then before we know it there will be draft law to contemplate, and then implementation.

It is not as if this were taking place against a backdrop of a lack of other activity. At the same time the market is absorbing two large acquisitions, and the industry is grappling with proposed accounting changes that could affect the amount of capital they are required to hold.

After a long period of relative calm, change, and therefore risk, in the insurance sector is rising rapidly.