Financial Markets Conduct (Conduct of Financial Institutions – Vero Liability Insurance Limited) Exemption Notice 2024

Summary

The Financial Markets Conduct (Conduct of Financial Institutions — Vero Liability Insurance Limited) Exemption Notice 2024 (Notice) exempts Vero Liability Insurance Limited (VL) from the requirements under the Financial Markets Conduct Act 2013 (as amended by the Financial Markets (Conduct of Financial Institutions) Amendment Act 2022) (the Act) to:

a)       be licensed as a financial institution; and

b)      establish, implement, maintain, and comply with an effective fair conduct programme.

The Notice comes into force on 31 March 2025. 

The exemptions are subject to conditions that:

a)       prevent VL entering into any consumer insurance contracts

b)      require VL to give policyholders under certain open consumer insurance contracts annual information including information on the exemptions under the notice, on the relevant policy and their entitlements under it and on how to make a claim or complaint; and

c)       require VL to maintain appropriate oversight over policyholder complaints, claims or other activity relating to its consumer insurance contracts to assess whether VL’s conduct complies with the fair conduct principle and, if there is any failure to comply, consider the steps it intends to take to mitigate any actual or potential adverse effects of the failure on the policyholder.

The key reasons for granting the exemptions are:

• VL has only a very small number of consumer insurance contracts in force, there is a low probability of late claims or complaints under Out-of-Force consumer insurance contracts and conditions will prevent VL entering into any new consumer insurance contracts
• in view of this, the costs of being licensed and complying with the duties to establish, implement, maintain, and comply with an effective fair conduct programme to meet the fair conduct principle under the Act are likely to outweigh the benefits for those consumers
• as the HSDW Policies and Out-of-Force Policies have already been purchased and no further premium payments are required, the key risks to policyholders relate to awareness of their entitlements under the policy and conduct risks in relation to any claims or complaints
• conditions will require VL to give policyholders under HSDW Policies relevant information and assistance to help them understand their entitlements under the policy and how to make a claim or lodge a complaint. This will enable them to make informed decisions about and confidently exercise their rights under those policies
• VL will also be required to maintain appropriate oversight over any policyholder complaints, claims or other activity relating to the HSDW Policies and Out-of-Force Policies to assess whether its conduct complies with the fair conduct principle and, and, if there is a failure to comply, to consider the steps it intends to take to mitigate any actual or potential adverse effects of that non-compliance on the policyholder
• as such, the FMA is satisfied that granting the exemptions is desirable in order to promote the purposes of the Act, specifically to promote the confident and informed participation of businesses, and consumers in the financial markets and to avoid unnecessary compliance costs
• given the limited application of the exemptions to where an insurer only has a very small number of consumer insurance contracts and conditions prevent further offers of consumer insurance contracts, the exemptions are not broader than is reasonably necessary to address the matters to which they relate.

Download the Financial Markets Conduct (Conduct of Financial Institutions – Vero Liability Insurance Limited) Exemption Notice 2024