Worth reading the detail in ASB's economic note if you are interested in proposals to change the targets the Reserve Bank of New Zealand uses to help set interest rates. The discussion of the various alternatives provide a good yardstick to consider the proposals. Link.
A little while ago we blogged about the causes of death, the main causes do not change a lot in short periods of time, so the table below, based on Ministry of Health data from 2011, is still a good views of the main causes. The reason for returning to this is to consider the causes of death in relation to the exclusions common in non-underwritten policies.
Pre-existing conditions, whether with a blanket cut-off at application, or with the ability to include them after five years without recurrence or treatment, are most likely to affect the categories of cancers, heart attacks, strokes, and respiratory diseases. What proportion of these causes are likely to emerge from a pre-existing condition or pre-disposition?
Now look at some of the other categories - take accidents, at 15% of the causes of death, and recall the exclusions relating to heights, speeds, presence on a building site, and certain occupations.
Lastly, look at the rate for suicide, which might also be considered a death from depression or mental illness, this is one of the top five causes of death at 8% of this group, exceeding the level for strokes. Many of the non-underwritten policies contain long suicide exclusion clauses (up to five years), and increasingly bank insurers are lengthening their exclusion clauses as well (up to three years).
These are the factors behind the recent changes made by Quality Product Research to the increased penalty for pre-existing conditions exclusions in the product quality database for Momentum Life and ASB Easylife. Other non-underwritten products will be added to the database and scored along similar lines.
We have just uploaded the Quality Product Research Limited database QPRV10.1 to Quotemonster and subscribers. This version included the following changes:
ANZ Trauma Cover:
Policy wording also updated to the most recent document in the database, standalone cover.
ASB Mortgage Protection Review:
Review & change made to Offsets / Mental Health Limitation / Partial Disability provisions
Enhancements of Trauma, TPD & Mortgage Protection for Business and Personal products (effective 19 June 2017)
Kiwibank Mortgage Protection Cover:
Product has been rated & policy wording uploaded to database
Westpac Trauma (accelerated only)
New score added under ‘Diagnosis & Partial benefit’ to capture ‘minor heart attack’
Sovereign Critical Illness
Updated pricing is being tested and will be applied to Quotemonster by tomorrow morning. The policy wording for these product enhancements has not yet been reviewed and will be reviewed and updated by 26 June, the QPR database will be updated again during that week.
If you are on claim with a bank mortgage cover and your mortgage is repaid during your claim does the claim end before you get to the end of the claim term?
Here is what we found:
ASB – Mortgage and Income Protection, benefit continues after mortgage has been repaid until the end of the chosen payment term.
Westpac – payments will cease if the mortgage is repaid. If disabled after the maximum 30 months and the life assured meets the TPD definition, Westpac will repay the outstanding loan amount. The policy then ceases.
Other banks have either Income based products, or an Agreed Value with a chosen benefit amount (Living Expenses).
"Banks have mounted an all-out attack on Financial Advisers Act (FAA) reform proposals to clearly distinguish ‘sales’ from ‘advice’ setting themselves at odds with industry bodies and consumers."
and also adds for clarity that
"...the big four Australian-owned banks and Kiwibank all strongly argue against introducing a formal distinction between ‘salesperson’ and ‘financial adviser’ into the regulatory mix."
Those a pretty strong words from David. I was interested in how we know that consumers would like a clearer distinction, and you might be too:
"An accompanying MBIE survey also found almost 90 per cent of consumers said “clarifying the difference between ‘sales’ and ‘financial advice’ would help them better understand what they are receiving”
ASB systems are now set up to allow the use of the salutation "Mx" instead of Mr, Mrs, or Ms. The addition of a non-gender specific salutation is a useful addition to the toolkit to respect diversity. Addressing a person as they wish to be addressed is good manners, of course, and good business sense. You can read a copy of the announcement at this link.
Policy upgrade features, the practice of updating in-force policy terms and conditions with upgraded features is relatively new. Some long-standing providers have only but recently adopted it. Due to the gradual incorporation of this feature by companies that distribute through primarily through financial advisers, many have shadowed competitors’ policy wording, and an increasing number of in-force policies now have the same terms as those issued new. Also, many benefit terms and conditions are very similar.
There are however two fundamental standards to consider:
When did the upgrade benefit come into effect; and
To what specified policy issue date (if any) does this benefit retrospectively apply.
We have summarised these in the table below:
For those companies with pass-back provisions extending to 2001 as a proportion of in-force books only a small minority of policies in-force will have products that do not auto update, but these may still number in the tens of thousands.
Most providers choose to extend this feature only to policies issued since the feature was introduced. Moreover, where the feature has been ‘passed-back’ to existing policy-holders, a limit has been fixed to how far back it applies. Consequently, the oldest in-force policies may be excluded from qualifying for this feature. Insurers have maintained this is a result of contractual obligations with reinsurers wherein older policies were approved on the basis of different terms and conditions than to those of newly-issued ones. Valid though it may be - insight conveys that clients who have been paying premiums for lengthy periods are, perhaps, disadvantaged. On the other hand some of these older policies retain some features that may not be available in a modern policy.
Outwardly the upgrade policy wording benefit emerges as a generous feature accentuating insurers’ commitment to recompense the loyalty of policy-holders. However, it also serves a purpose of synchronising existing products’ content with developments in the macro-environment. An insurer benefits as much as existing clients from the upgrade benefit, which enables insurers for example to:
curtail anti-selection (where the healthier lives in an in-force product abandon it and update their cover with a competitor, leaving only an aging in-force client base)
consolidate IT platforms where all system developments designed to manage enhanced products can also accommodate all in-force clients
eliminate varied pricing segments for the same products - facilitating a streamlined pricing strategy
avert excessive administrative costs which can spur from mass policy conversions by existing clients wanting enhanced products
simplify operational processes by transferring older policies to current terms of administration
relay consistent brand messaging and product-related publications
There are a number of reasons why you may not be able to see the banks on Quotemonster or in the pdf reports.
We don't offer the premiums for the banks on Quotemonster and therefore you will only be able to view banks if you subscribe to QPR.
If you are using QPR and can still not view the banks it may be due to either of these:
The banks may not offer the product or options that you are quoting on. For example, a number of the banks do not offer Standalone products, they only offer Accelerated so please ensure the banks offer the products you are quoting.
You have to ensure that you select the banks in "Step 3: Compare Insurers" in the "Research" tab. There is a drop down box labeled "Select More Companies" which lets you select which companies you want to appear on your report. Make sure you select the banks here and click 'Save'.
If you are still having issues please feel free to contact us on (09) 480 6071.