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We love that you pop over to the blog. If, like me, there are a lot of sites you try to keep up with, then getting a summary every now and then can help a lot. If you are interested in joining our mailing list for either our weekly or quarterly newsletter contact Jerusalem.Hibru@chatswood.co.nz to express your interest. Alternatively, you can join both our weekly and quarterly newsletters to see weekly highlights of blog items and keep up with quarterly news updates.

Premium trends

Interesting: AIA Living has no minimum premium. Of course, there is a policy fee, effectively creating a minimum, but this ends a trend which started perhaps 30 years ago towards higher minimum premiums. A tactical reason for no minimum is that it means you are never knocked out of a direct comparison for having a lower premium, which can happen. A strategic reason could be the more customer focused one: this makes the cover amount decision about what the customer needs, not a floor for the company. 

See you at the financial advice New Zealand conference

I plan to  be there bright and early on Thursday morning and I am looking forward to the programme which includes the following keynotes:

• Hon Kris Faafoi
• Hagai Segal – Being Brave in an uncertain world
• Dominick Stephens – Economic Update
• Adele Ferguson – An insider’s view of the Hayne Royal Commission
• Brett Roberts – Change and disruption – the opportunity to be Brave and Bold
• Matt Church – NEXT: Thriving in the decade of disruption
• Matina Jewell – Courageous leadership in time of change
• Hon Paul Goldsmith & Mark Sorenson (at dinner)

I will be at the Quotemonster stand in the exhibition hall during the breaks too - do stop by and say hello.  

Will adviser business valuations fall due to the implementation of new financial adviser law?

In Australia adviser business values have fallen from an average of  a multiple of four times renewals to 2.5 times. Their new advice regime is different to ours, but the direction of travel for New Zealand is similar. Is a multiple of renewals still valid as a guide to value?

Join the conversation.

There are just 2 weeks left until our adviser business seminars in both Tauranga and Hamilton, we encourage you to register.  The seminars will be focused on:

• Exploring the factors that make a valuation necessary
• The ways an adviser may use a credible valuation
• The relevance of valuations in relation to current issues
• The effect of recent agency and commission changes on valuations
• The marketplace for adviser businesses - and some of the experience of advisers in buying and selling

Please follow the registration link to ensure your spot.

FSC: Towards Wellbeing Conference Full Programme

The FSC have launched the full programme for the upcoming Towards Wellbeing conference on the 11th and 12th of September. It is going to be an outstanding event, bigger and better than last year. The content selection has grown considerably with over 100 speakers across 35 sessions. We are expecting over 500 attendees. Click here to view the full programme. 

nib full year results details

You can find the analysts presentation for the nib full year results at this link. 

Consultation: New financial advice regime exemptions

The FMA have released an announcement regarding the new financial advice regime exemptions, stating:

This consultation considers three matters where we think it may be useful to continue existing Financial Advisers Act exemption relief to support effective operation of the new financial advice regime:

• Australian licensees
• Overseas custodians – assurance engagements
• Australian qualified advisers.

This consultation also considers matters where we think existing FA Act exemption support will no longer be required given expected changes in the law:

• Recognition of alternative qualifications
• NZX and non-NZX brokers – client money and client property
• Personalised digital advice
• Offers of financial products through AFAs supplying personalised DIMS.

They are welcoming feedback on this - click here to read more. 

Council of Financial Regulators

I'm going to use this one in a 'know your regulatory landscape' question at a workshop sometime. Name the members of the Council of Financial Regulators...

In summary, as follows:

The Council of Financial Regulators (CoFR) announced a new vision for New Zealand’s economic wellbeing and welcomed the addition of the Commerce Commission to the forum. The new vision aims to contribute to maximising New Zealand’s sustainable economic wellbeing through responsive and coordinated financial system regulation, and allows for a longer-term view that more effectively recognises the specific responsibilities of each agency. The members of CoFR are:

• Reserve Bank of New Zealand (RBNZ);

• Financial Markets Authority (FMA);

• Commerce Commission;

• Ministry of Business, Innovation and Employment (MBIE); and

• The Treasury.

 

So now you know. This is important. My compliance guru and I have often wondered why the Commerce Commission played no part in the FMA/RB review of banks, being the regulator for lending, for example, and also being responsible for actions under the Fair Trading Act. 

Thank you!

On August 18 2004 this blog was started and since then I have learned a lot and enjoyed a lot more interesting conversations with you. Often something I write is found to be useful, controversial, or though provoking. Even the simple posts that are just a sign-post to something handy somewhere else - they all have a part to play because this is a specialist site for life and health insurance - making it a very focused place to get news about the sector, without wading through a lot that is more appropriate to, say, investments, banking, or home loans. I am very privileged to have you read what's here and so the anniversary is really about acknowledging you. Added to that, special thanks to some people who have taken an interest in writing and how to do it over the years. I hesitate to name any for fear of leaving some out but a few that come to mind are Tony Haas, David Chaplin, Philip Macalister, Susan Edmunds, Diana Clement, Mike Maloney, Tony Vidler, Barry Read, Jeremy Bernstein, Rob Dowler, Jenee Tibshraeny, Simon Papa, Murray Weatherston,  Regan Thomas, and J-P Hale.

Writing about money is strange, and writing about insurance, that ugly cousin of the more exciting bits of the world of money, even more so. I am grateful to many authors and bloggers for their inspiration. A few that stand out are Tim Harford, Steven Levitt, Stephen Dubner, and Alain de Botton, were great at demonstrating how to write with insight and humour about economics and money. I also liked folks like Daniel Kahnemann, Amos Tversky, Richard Thaler, Cass Sunstein, Malcolm Gladwell, David Ropeik, George Gray, and Adam Smith for their insights into how people think, because so many things people do with their money do not appear to be rational. Sometimes they just don't look like it, but actually are rational. Other times irrational oddities come out of having a brain wired by evolution to serve up shortcuts to complex problems without showing its workings. I have especially enjoyed the rarest category of all, people writing directly about insurance - so they deserve a special mention: The Norm Chronicles - Michael Blastland and David Spiegelhalter, and Risk Management and Insurance in New Zealand - Michael Naylor.

Lastly, my traditional call for people that would like to write about insurance - please do! Give me a call, we can swap ideas and I can help promote your work. 

Fidelity Life to reduce plastic wastage

Fidelity Life have announced that they are changing the way they package applications forms and other stationery sent to advisers based on the feedback they have received. They are getting rid of the old plastic wrapping and will instead be using paper bands.

Advisers can now order quantities of their choice instead of having to order packets of 5 or 10 of each thing.

 

New nib Travel CEO

Congratulations to Anna Gladman who has been announced as nib's new Travel CEO. Gladman will start her new role on the 2nd of September and brings with her a wealth of experience in the financial services industry.

Financial Advice New Zealand 2nd annual meeting reminder

Financial Advice New Zealand 2^nd annual meeting is next week. Details are as follows:

Date:                Wednesday 21st August 2019

Time:                2.00pm

Venue:             SkyCity Convention Centre, 88 Federal St, Auckland or online if pre-registered

 

Items of Business

1. Welcome
2. Apologies
3. Call for General Business
4. Minutes of Annual General Meeting 27 September 2018
5. Presentation of the Annual Report
6. Presentation of the 2018-19 Financial Statements
7. Board composition
8. Board resolutions
9. Announcement of Board election results and confirmation of the 2019-2020 Independent Director appointments
10. Appointment of Auditor 2020
11. General Business

Registration will open 30 minutes before the start of the meeting.

If you are unable to be present on the day, you can register to attend via Live Stream. Members who pre-register and then confirm their presence, will be noted attendees, and can vote during the meeting. Click here to pre-register.

Alternatively, you can attend via proxy. If you wish to appoint a proxy, please complete the Proxy Form and return it to katrinas@financialadvice.nz no later than 48 hours before the meeting. Any member attending in person can carry one proxy vote on behalf of another member.

All members are invited to join the Board for light refreshments following the meeting. To RSVP contact Belinda Armstrong,  belindaa@financialadvice.nz.

Members who wish to suggest an item of General Business for discussion should send details to the Board c/o katrinas@financialadvice.nz by 19th August 2019.

If members have any questions, contacting Katrina Shanks directly on 021 474 010 or katrinas@financialadvice.nz iis recommended.

 

LADUCA Claims and Underwriters Conference Pathway

Less than a month to go to for the LADUCA Claims and Underwriters Conference Pathway Sessions at the FSC Towards Wellbeing Conference inSeptember. There are many issues facing claims and underwriters from Genomics to automation, and this one day specially curated pathway, not only focuses on these issues, but also gives delegates the opportunity to hear about the issues facing the financial sector in New Zealand and globally. 

There are still some discounted tickets which can be purchased at this link.

Partners Life premium changes announced

Partners Life have announced they are making changes to premiums for Mortgage Repayment and Household Expenses effective 1 October 2019. The quote software will allow you to quote the new rates from the 10th of September by ticking a box and new rates will be automatically quoted from the 24th of September.

The announcements stated:

Partners Life has recently completed a deep dive analysis of emerging claims trends across all product lines. One of the trends we have identified is that our Mortgage Repayment and Household Expenses claims experience is closely aligned with our Agreed Value Income Cover experience, despite being priced significantly lower.

As a result of this analysis, we have decided to bring the pricing of these two benefits into line with our Agreed Value Income Cover pricing, which will result in a 15% increase in underlying premium rates for Mortgage Repayment and Household Expenses benefits.

Experience with Life Insurance Maturities

From a policyholder, words relating their experience of collecting maturity proceeds: 

The maturity of old-style endowment life insurance policies should provide an opportunity for a life insurance company to acknowledge what is usually a decades long customer relationship and to leverage customer goodwill for the company and the industry.

How about the actual experience?

First up, is the legislative provision requiring fulfillment of AML identification at maturity, if not completed earlier – not necessarily the best start but outside of the company’s control.Beyond that, here are two examples of what happened. In both cases, all required documents, well before maturity date, were completed and provided to the respective insurance companies, AMP and Foundation Life (the latter being the purchaser of Tower’s life business).

In the case of AMP, matters progressed as follows:

4 March 2019 – My AMP online shows the maturity as having been initiated but un-allocated.

31 May 2019 – The maturity date came and went.

10 June 2019 or thereabouts – Travelling overseas, sent an inquiry via the AMP online contact website seeking advice on why the maturity proceeds had not been paid.

12 June 2019 – Received an e-mail advising that maturity proceeds had been paid into my bank account, with an apology for the delay, stated to arise “due to unexpected staff absences.”

13 June 2019 – Via e-mail, I acknowledged receipt of the funds, even while noting that the benefit of the delay will have accrued to AMP and that, without seeking compensation, no financial compensation was offered to be paid for the delay to offset the time value of money lost.

19 June 2019 – On arrival home from overseas travel, I found a letter from AMP dated 4 June 2019 advising me that AMP had not received my instructions for maturity so were holding the funds until receiving the completed settlement form (which you will note was completed before the start of the timeline above).

Then to Foundation Life.

1 May 2019 – Letters received from Foundation Life regarding the maturity of three policies

7 May 2019 – All required documents completed and returned to Foundation Life and, as requested, a phone call is subsequently received confirming that all requirements have been met.

24 July 2019 – Maturity date and maturity proceeds received into my bank account, but direct debits also completed removing two small unusual and, relative to premiums, unidentifiable amounts from my bank account. The maturity proceeds for two the policies are also less than expected, the differences matching perfectly the amounts direct debited from my bank account. I telephone Foundation Life to query the direct debits and short paid maturities, and I am told to expect an answer in a few days after investigation.

30 July 2019 – Foundation Life phone me and apologise for the direct debits, which should not have occurred and advise me that a letter will follow explaining each maturity payment amount, which is correct. I question why, if the direct debits should not have occurred, and the maturity payments received should have included a refund for the incorrect direct debit amounts, how come the maturity payments are less, not more, than originally advised. The Foundation Life staff member says, “You are right”, and said that it will be investigated further before responding again to me.

5 August 2019 – The shortfall in maturity payment and a refund of the direct debits are credited to my bank account.

Premium Comparison Version 105 Released

We have just distributed the new version of the Chatswood Premium Comparison database. This is version 10.5, which includes:

• Added new 'AIA Living' range as a new company for all benefits
• Updated Fidelity YRT Life, TPD, Trauma and Mortgage Protection rates effective 8/8/19
• Previous AIA rates are shown as 'AIA Real' and old Sovereign rates remain as before
• There are new options 'AIA Vitality Discount' and 'AIA Vitality Fee' which allow you to view rates with or without these included

The updated Medical Premium comparison will be available later today. There is more change on the way as Partners Life has announced  an increase to mortgage protection premiums to apply from 1 October. 

Free quoting of the market

Free quoting of the insurance market for all the main adviser companies, for a very wide range of their product sets is a core service in Quotemonster. To get product research, head-to-head comparisons, and research reports you need to subscribe - but it is worthwhile noting that free quoting includes all these options: 

Health: Base plan all Excesses, Specialists and Tests - $250 excess only, Loadings

Life, Level and RFA: Indexed, Future Insurability, Loadings

Family Protection: Fixed term or 'to age', Loading

Trauma: Standalone, Accelerated, YRT/RFA, Level 10 years, To age 65, To age 80

Optional extras: Life buyback, Trauma buyback, TPD Add-On, Early Cancer Benefit, Loading

Progressive Care: Standalone, Accelerated, YRT/RFA plus Level 10 years, To age 65, To age 80, Loading

TPD: Standalone, Accelerated, YRT/RFA plus Level 10 years, To age 65, To age 80, Own Occ, Any Occ, Option of life Buyback for accelerated, Loading

DI: YRT/RFA only, Indemnity, Agreed Value, Wait Period: 4,8,13,26,52,104 weeks, Benefit Period: 1, 2 & 5 years, To Age 65, To Age 70, Option of Booster Benefit, Loading

Mortgage Cover: RFA only, Wait Period: 4,8,13,26,52,104 weeks, Benefit Period: 1, 2 & 5 years, To Age 65, To Age 70, Loading

Redundancy: Loading 

 

Asteron Life engine of growth in Suncorp New Zealand

It has been announced that Suncorp New Zealand’s general and risk insurance businesses generated $261 million in net profit after tax (NPAT) for the year ended 30 June 2019 . The life insurance division made $44 million, a 12% increase from the previous financial year. While In-force premiums increased by 3.9%

Asteron Life: Finding our voice with customers

Asteron Life will increase direct communication with policy holders under a new plan to ensure more engagement. See this release: 

Onboarding communications will be a two-year programme of regular touchpoints with customers to help keep them engaged and informed about how their life and disability cover can support them.

Our new onboarding communications will be sent via email to new customers who sign up with Asteron Life from 30 July. They will include:

• A welcome email with an overview of their policy and cover.
• Follow-up emails at day 30, month 6, month 10, month 16 and month 22.
• These communications will acknowledge your recommendation, reassure that we will be there at claim time and remind them about the benefits that you recommended.
• Links to tips and blogs on our website about aspects of life and disability insurance which often aren’t well understood.
• Case studies.

Existing customers will also start receiving some of the follow up emails, depending how long they have had their policy for.

Asteron Life aim to ensure that the communications will support the adviser relationship: 

"...if customers have questions about their cover or need some guidance, our onboarding communications will direct them straight back to their adviser."

 

 

Premium comparison

Updating the life premium comparison database is a big job right now as we are creating the option to include or not the new AIA Vitality fee and discounts. Interaction between these and the multiple benefit discounts are essential to understanding the new pricing position. While a quick check of a couple of individual quotes may offer a glimpse of what  is happening, nothing beats being able to survey the impact across multiple lines of business, lives, occupations and the whole age curve. I am as eager to see the results as you are but coding these changes is going to take us another couple of days.