New Zealand's Financial Markets Authority (FMA) said it has published a review of add-on insurance and extended warranties, finding that stronger oversight of sales and distribution channels is needed to support fair consumer outcomes, according to a Thursday statement.
The review examined how insurers design, distribute and oversee products such as mechanical breakdown insurance, guaranteed asset protection (GAP) insurance, payment protection insurance and extended warranties, finding a recurring gap between the policies and controls insurers described and how they operated in practice, per the statement.
FMA director Michael Hewes said insurers cannot outsource responsibility for fair consumer outcomes, with distribution oversight identified as the area where the most improvement is needed, as the review found limited evidence of monitoring proportional to the risks associated with commission-based and intermediated sales models.
The FMA has provided targeted feedback to participating insurers and expects the wider sector to consider the findings and consider whether similar issues exist in their own operations.
In recent Thursday trade on the Australian bourse, QBE Insurance (ASX:QBE) fell 4%, Insurance Australia Group (ASX:IAG) fell almost 3%, and Suncorp (ASX:SUN) fell almost 3%, while Tower (ASX:TWR, NZE:TWR) rose 1%.
