Health and life insurers will be exempt from climate-related disclosure regime with Commerce Minister Cameron Brewer saying there’s little value in making them report on it as they aren’t ‘directly exposed to climate risks’

Health and life insurers will be exempt from climate reporting requirements, which the Financial Services Council says added compliance costs of $10 million to $15 million a year.

Nine health and life insurers will be removed from the climate reporting regime.  The announcement was made on Thursday by Commerce and Consumer Affairs Minister Cameron Brewer. 

"Unlike general insurers, health and life insurers aren't directly exposed to climate risks like extreme weather events, so there's little value in making them report on it. They've told us they don't belong in the climate reporting regime, as ultimately it adds cost to their clients," Brewer said.

"This is a commonsense fix. It's about making sure the right businesses are reporting, not tying up firms in paperwork that does nothing for anyone.”

Last year, the Government announced it would raise the climate reporting threshold to $1 billion in market capitalisation for share market listed entities and removed managed investment schemes.

"Our largest businesses, the ones with the greatest impact and the resources to comply properly, will still report. This is about cutting costs where they don't make sense, not lowering the bar for those who should be at the table," Brewer said.

The Financial Services Council (FSC), the lobby group for life and health insurers, fund managers and other financial service providers, said the climate reporting rules added cost without clear customer value.

“Health and life insurers do not insure homes, farms or roads against floods and storms. They protect people when they get sick, can’t work or when their family needs support," FSC chief executive Kirk Hope said.

"The previous regulations treated very different risks as if they were the same. That added [a] compliance cost of $10 million to $15 million a year without clear value for New Zealanders."

The country has seen rising health insurance premiums. In the most recent Consumers Price Index (CPI) data release, health insurance saw a 20.5% annual jump. Last year, the Reserve Bank said health insurers were facing “pressure from increasing claims costs.”

Hope said removing unnecessary costs from the system was the right thing to do.

"Climate risk still matters and insurers will keep managing it through governance and prudential oversight. But mandatory investor-style climate reporting was not the right tool for health and life insurance customers.”

FMA's ‘no action’ approach 

The Financial Markets Authority (FMA), the financial markets regulator, will provide interim relief by taking a ‘no action’ approach to entities who are expecting their climate reporting obligations to end when legislation is passed. The Government intends for legislation to be passed as part of the Financial Markets Conduct Amendment Bill.

The ‘no action’ approach starts on June 19 and will apply to life and health insurers with upcoming lodgement dates for the 2025/2026 reporting period.

FMA general counsel Liam Mason said many life and health insurers will be impacted by the uncertain timeframe in which the amending legislation might be passed.

“This will mean that they do not know whether they will be required to lodge climate statements. This approach will avoid unnecessary compliance costs and promote the development of fair, efficient and transparent financial markets," Mason said.

“It also aligns with the intent of the proposed legislative change following the recently announced government decisions.”